The Conservatives promised increases in the nil rate band in their election manifesto relating to the family home. This resulted in the new main residence nil-rate band (RNRB), whereby eventually an extra £175,000 nil rate band per person will potentially be available to spouses and civil partners in addition to their normal nil rate band of £325,000 each.
The legislation is still in draft form, but currently includes the following provisions:The residence must pass to direct descendants (children and grand-children, but it does include step-children, adopted and foster children). The residence must be part of the deceased’s estate on death. The deceased must have lived in the residence at some stage (but not necessarily as his main residence). The amount of RNRB relates to the value of the residence up to the maximum of the RNRB. Any unused RNRB can be transferred on the second death. RNRB is tapered away gradually where the net estate exceeds £2 million. The normal NRB will remain frozen at £325,000 until April 2021.
It will be introduced for deaths on or after 6 April 2017.