Mark McLaughlin looks at an inheritance tax pitfall and planning point surrounding the inheritance tax transferable nil rate band.
The inheritance tax (IHT) allowance (or nil rate band) is available to every individual. In addition, the transferable nil rate band (TNRB) is a helpful facility for married couples and civil partnerships.
Transferable nil rate band
The TNRB rules broadly allow claims for unused nil rate band of a deceased spouse (or civil partner) to be transferred to the surviving spouse. The survivor's nil rate band can be increased by up to 100%, or one additional nil rate band. Thus, a surviving spouse's nil rate band can increase to a maximum (for 2022/23) of £650,000 (i.e., £325,000 x 2).
‘Residence’ nil rate band can potentially contribute to an effective IHT threshold of £1 million per married(
