IHTM46040 - Transfer of unused RNRB: the brought-forward allowance
The brought-forward allowance is an amount that increases a person’s default allowance (IHTM46024). It is broadly the residence nil rate band (RNRB) that was unused on the earlier death of a spouse or civil partner, but the actual amount available is increased in line with changes to the residential enhancement (IHTM46022) between the two deaths. If there is any unused RNRB in the estate of the first spouse or civil partner of a couple to die, this unused part is available to increase the RNRB available to the survivor’s estate when they die.
It is important to remember that the brought-forward allowance only increases the maximum RNRB that might be available on the second death – strictly it increases the person’s default allowance. Any enhanced RNRB will only be available on the second death to the extent that there is a qualifying residential interest (IHTM46011) which is closely inherited (IHTM46013). Some examples showing how to apply the brought-forward allowance are set out at IHTM46043 and IHTM46044.
The brought-forward allowance is calculated by reference to the unused percentage of the residential enhancement on the earlier death. Where that earlier death occurred before 6 April 2017 the residential enhancement at that time is deemed to have been £100,000 (IHTA84/S8G(4)).
It is possible to transfer unused RNRB from more than one pre-deceased spouse or civil partner by adding together percentage of unused RNRB from each of them, but the total percentage is limited to 100%.
The total percentage is then multiplied by the residential enhancement at the date of the survivor’s death to determine the brought-forward allowance. Once calculated this is simply added to the residential enhancement at the survivor’s date of death to arrive at their default allowance.
Much the same as for transferable nil rate band (IHTM43001), the transfer of unused RNRB is available regardless of:
- when the earlier death took place,
- how much that earlier estate was worth, as long as the taper threshold does not reduce the available allowance to nil, and
- whether or not the estate included a residence.
Also, in common with the transferable nil rate band, the transfer of unused RNRB does not apply automatically. It has to be claimed, see IHTM46042
For deaths before 6 April 2017.
For deaths before 6 April 2017, as there was no RNRB at that time, none can have been used. The brought-forward amount will be 100% of the residential enhancement in force at the later death of the surviving spouse or civil partner. The only factor that might reduce the brought-forward amount is if the earlier estate value was greater than the £2,000,000 taper threshold (IHTM46023), in which case the tapering provisions will apply (IHTA84/S8G(5)). Examples 1 and 2 at IHTM46044 show this.
For deaths on or after 6 April 2017
For deaths on or after 6 April 2017, as RNRB was available it is possible that some or all of the available RNRB may have been used on the first death, reducing the unused amount which can be transferred. Again, there is no minimum value an estate must have been worth, and there is no requirement that it included a residence. However, the value of the unused RNRB on the first death may be reduced by the tapering provisions if the taper threshold was exceeded, or by the value of any RNRB used if there was a residence in the estate that was closely inherited. The brought-forward allowance takes these factors into account (see example 2 at IHTM46041).