What is residence nil rate band?

A residence nil rate band came into existence on 6 April 2017. The residence nil rate band is an allowance for passing on the family home. It is currently £175,000 and can be transferred between married couples and civil partners. The allowance is tapered down for people with larger estates, reducing by £1 for every £2 that the estate is valued at over £2 million. The residence nil rate band can only be used when passing on a residence to ‘direct’ or ‘lineal’ descendants and applies only to your home, not a buy-to-let property. ‘Direct’ or ‘lineal’ descendants refers to children (biological, step or adopted), grandchildren or great-grandchildren.

For tax advice, consult a qualified accountant.