How does the RNRB interact with the standard NRB?

StevieD54

An example I’ve seen goes something like this…….Fred dies with an estate of £490k, the £175k RNRB is deducted, leaving £315k, so no IHT is payable on the remaining assets.  But did the original £490k estate value include Fred’s property?  If so, how is a property valued for estate value purposes?

bobster2

In simple terms, you value the estate (including the property) - then you deduct however much of the RNRB (£175k) and NRB (£325k) the person has available - and it's the remaining part that is subject to IHT.

So an estate with the full RNRB and NRB available would need to be valued > £500k for any IHT to be chargeable.

For an authorative property valuation - it is recommended that you get a RICS standard valuation from a surveyor (e.g. if there's a chance of HMRC quibbling). However, if no IHT is going to be due (e.g. estate worth much less than £500k) you could use several estate agents and take the average.

p00hsticks

bobster2 said:

In simple terms, you value the estate (including the property) - then you deduct however much of the RNRB (£175k) and NRB (£325k) the person has available - and it's the remaining part that is subject to IHT.

So an estate with the full RNRB and NRB available would need to be valued > £500k for any IHT to be chargeable.

as I understand it (but I may be wrong), the person only has a RNRB up to the actual value of the property, if that's less than £175k. So if the property was valued at, say £100k, they would only be entitled to that much RNRB and IHT would therefore be due if the total estate exceeded £425k.

Daniel54

You are correct ,as per linked example

The RNRB only applies after the NRB has been taken into account

If the property value is less than £175k,then the lower value applies

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

bobster2

p00hsticks said:

bobster2 said:

In simple terms, you value the estate (including the property) - then you deduct however much of the RNRB (£175k) and NRB (£325k) the person has available - and it's the remaining part that is subject to IHT.

So an estate with the full RNRB and NRB available would need to be valued > £500k for any IHT to be chargeable.

as I understand it (but I may be wrong), the person only has a RNRB up to the actual value of the property, if that's less than £175k. So if the property was valued at, say £100k, they would only be entitled to that much RNRB and IHT would therefore be due if the total estate exceeded £425k.

Yes. I should have made that clear - that's partly what I was referring to when I mentioned how much the person "has available".

getmore4less

Daniel54 said:

You are correct ,as per linked example

The RNRB only applies after the NRB has been taken into account

If the property value is less than £175k,then the lower value applies

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

RNRB gets used first