The Residential Nil Rate Band

24 May 2016

Under the current Inheritance Tax regime, on death the first £325,000 of each individual's net estate is taxed at 0%.  This is known as the "nil-rate band" ("NRB").  Unless any tax reliefs apply, the rest of their net estate is then taxed at 40%.

For couples who are married or in a civil partnership, if the first to die has not used their full NRB, the allowance can be transferred to the surviving spouse, effectively providing them with a tax-free allowance of up to £650,000.  This most typically occurs when the first to die leaves their entire estate to the surviving spouse, as gifts between spouses are usually entirely tax-free.

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