What is a Nil Rate Band

The Nil Rate Band (NRB) is the threshold up to which an individual's estate is not subject to Inheritance Tax (IHT) in the UK.

Key Points:

- As of now, the NRB is £325,000 per person.

- Any part of an estate that falls within this amount is taxed at 0% for IHT purposes.

- If the estate exceeds the NRB, the excess is usually taxed at 40%.

- Transferable NRB: If the first spouse or civil partner dies without using their full NRB, the unused portion can be transferred to the surviving spouse. This means a couple could have up to £650,000 tax-free.

- Residence Nil Rate Band (RNRB): An additional allowance (currently up to £175,000) applies if the deceased leaves their main residence to direct descendants (children, grandchildren, etc.). Combined with the NRB, this can give individuals a tax-free allowance of £500,000, or up to £1 million for couples.