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IHT residential nil rate band anomalies

22 May 2018 / Anthony Meehan
Issue: 4648 / Categories: Comment & Analysis

Safe as houses?


  • The inheritance tax residence nil rate band applies if a testator’s estate includes a qualifying residential interest that is closely inherited.
  • Planning may result in the same liability but the amount payable may be borne by another party.
  • The residence nil rate band is not set against the property; it simply reduces the tax on the overall estate.
  • Revoking an interest in possession during lifetime may result in an increased liability on an early death.
  • Although the residence nil rate band does not apply to lifetime gifts it can still apply to property taxable under the gift with reservation rules.
  • A revocable life interest trust should come with advice on who bears the tax liability and the risks of a loss of allowances.
  • ...

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