IHT Nil Rate Bands Flashcards
What is the basic nil rate band limit?
£325,000.
What is the cumulation rule?
Lifetime chargeable gifts within last 7 years reduce the NRB.
Effect on NRB if person made two gifts of £50,000 and £100,000 before death within 7 years?
£175,000 NRB remains (£325,000 - £50,000 - £100,000).
What happens to unused NRB?
It can be passed to the surviving spouse.
How is transferable NRB calculated?
By percentage of unused NRB, not value amount.
Can TNRB be passed to new spouse on remarriage?
Yes, but maximum total transferable NRB is 100%.
What is Residence Nil Rate Band (RNRB)?
£175,000 – applies to qualifying residential property left to direct descendants.
When does RNRB apply?
When property is left to direct descendants (children, grandchildren, stepchildren).
Can RNRB be transferred?
Yes, if unused by the first spouse.
What happens to RNRB for estates over £2 million?
Reduced by £1 for every £2 above the threshold.
What estate value disqualifies RNRB entirely?
Over £2.35m for individuals or £2.7m for couples.
Can RNRB be transferred like NRB?
Yes, using the same principles.
What are downsizing provisions?
Allow claiming RNRB if home was sold/gifted after July 2015 and part of estate goes to direct descendants.
What qualifies as downsizing?
1) Home sold/gifted after July 2015
2) Part of estate inherited by direct descendants.
Example of downsizing with new house worth £100,000?
Can use £100,000 for house, £75,000 RNRB on other assets.
What is maximum tax-free combined NRB and RNRB?
£1 million.
