Transferring unused residence nil rate band for Inheritance Tax
Find out the rules for transferring unused tax-free residence allowance to a surviving spouse or civil partner.
Any residence nil rate band (RNRB) that’s not used when someone dies can go to their spouse or civil partner’s estate when they die. This transfer can also happen if the first of the couple died before 6 April 2017, even though the residence nil rate band was not available at that time.
The residence nil rate band and any transferred residence allowance is available if the surviving spouse or civil partner:
- leaves a home to their direct descendants
- includes the home in their estate
Homes that qualify
The home that the surviving spouse or civil partner leaves to their direct descendants does not have to be the same home that they lived in with their partner to either qualify for the residence nil rate band or to transfer it.
They do not have to have previously owned the home with their late partner, or inherited it from them. It can be any home as long as both these conditions are met:
- the surviving spouse or civil partner lived in it at some stage before they died
- the home is included in their estate.
Check when unused threshold may be transferred
The residence nil rate band may still be available under the downsizing rules if the surviving spouse or civil partner sold or gave away their home on or after 8 July 2015 and they leave other assets to their direct descendants when they die.
Couples who are not married or in a civil partnership, or who’ve divorced, will still be able to benefit from the residence nil rate band individually if they leave a home to their direct descendants. However, they will not be able to transfer any unused residence nil rate band to each other.
Where the first of the couple died before 6 April 2017 their estate would not have used any of the residence nil rate band as it was not available. So 100% of this tax-free allowance will be available for transfer unless their estate was worth more than £2 million and the residence nil rate band is tapered away.
Calculate the available amount to transfer
It’s the unused percentage of the residence nil rate band that’s transferred, not the unused amount. This makes sure that if the maximum amount of residence nil rate band increases over time, the survivor’s estate will benefit from the increase in the threshold.
You calculate the actual amount that’s transferred to the surviving spouse or civil partner’s estate in 2 steps:
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Work out the percentage of residence nil rate band that was not used when the first of the couple died. You do this by dividing the unused amount of threshold by the total that was available when the first of the couple died and multiplying the result by 100. If the person died before 6 April 2017 the unused residence nil rate band and total available are both deemed to be £100,000 so the unused percentage is 100%.
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Multiply the percentage of unused residence nil rate band when the first of the couple died by the maximum residence nil rate band available at the time of the survivor’s death. This gives you the sum available to transfer.
Example
A man died in 2015 and left his entire estate of £600,000 to his wife. This was before the residence nil rate band was available, so 100% is available to transfer to his wife’s estate.
His wife dies on 30 July 2019 and leaves all her estate, including a home worth £400,000 to her daughter.
When she dies in the tax year 2019 to 2020, the maximum available residence nil rate band is £150,000.
Her executor makes a claim to transfer the unused residence nil rate band from her husband’s estate.
So the total available residence nil rate band for his wife’s estate will be £300,000 (£150,000 + (transfer of 100% x £150,000)).
Transferring any unused residence nil rate band
The estate’s personal representative will need to give details of the amount due and supporting information on the Inheritance Tax return.
They’ll make a claim to transfer any unused residence nil rate band from the estate of a late spouse or civil partner.
As the residence nil rate band and basic Inheritance Tax threshold are not linked, the percentages transferred can be different. This means that even if all of the basic Inheritance Tax threshold was used when the first of the couple died, you can still transfer the unused residence nil rate band.
The percentage of transferred residence nil rate band is limited to 100%. This means that if an individual has had more than one spouse or civil partner and they make a claim to transfer the unused residence nil rate band from each one, the total transferred residence nil rate band cannot be more than 100% of the maximum available amount.
Calculate the residence nil rate band for the estate of someone who has died.
Updates to this page
Last updated 5 September 2019 + show all updates
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The additional threshold has been renamed residence nil rate band (RNRB).
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A link to the Calculate the additional threshold for the estate of someone who has died has been added to the page.
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Information about how to transfer the higher threshold (RNRB) has been added to this guide.
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First published.