On 8th July HMRC issued a statement setting out some of the detail about this proposal. The Devil is certainly in the detail!

Even now we will have to await the legislation before some details become completely clear.

A number of points have however become clearer.

The additional nil rate band (ANRB) will only apply when a residence is passed on death to a direct descendant.  Direct descendant will be a child (including a stepchild, adopted child or foster child) of the deceased and their lineal descendants.

The property has only to have been the residence of the deceased “at some point” and be included in their Estate.  If you own more than one property at your death then your Executors can choose to which property the relief is to apply.  The relief can only be offset against one property and not split between a number of properties.  No definition of “residence” is yet available but it will no doubt require some degree of permanency or at least the intention of permanency.

The Government proposes that the relief will still be available if the deceased has “downsized” or sold their only residence during their lifetime.  Once again how this will operate in practice is unknown.

The relief will only be available from 5th April 2017 and will then be worth £100,000, increasing, in stages, until it is worth £175,000 from 5th April 2020.  In the meantime the existing nil rate band (of £325,000) will remain frozen until April 2021.

If however a person downsizes or ceases to own a home on or after 8th July 2015 the ANRB will still be available in respect of deaths after 6th April 2017.

The relief will be transferable between spouses and civil partners – presumably in the same way as the existing transferable nil rate allowance.  A claim to the transferable allowance will have to be made in the usual way.

The relief is further restricted in the following ways:-

  • If the net value of the Estate (after deducting any liabilities but before reliefs and exemptions) is above £2,000,000, the ANRB will be tapered away by £1 for every £2 that the net value exceeds that amount.  This threshold will rise in line with the Consumer Prices Index from 6th April 2021.
  • The value of the ANRB will be the lower of the net value of the interest in the property (after deducting any liabilities such as a mortgage) or the maximum amount of the ANRB.


The relief is certainly not as simple as was suggested in the initial announcement.

There is a significant amount of detail which is still unclear.  It is not clear whether the relief will apply to properties, or a share in a property, that is owned by a trust but, because of the way in which Inheritance Tax works, we believe this may be the case.

Given the various restrictions the relief will be of limited benefit.

If you or your parent(s) have sold a property it will be sensible at this time to ensure you keep a copy of the statement giving details of the sale price etc as well as copies of Council Tax and other utility bills where possible and other mail as evidence of occupation.  This should help in any future claim for the relief.

The Tory Party first talked of introducing a £1,000,000 nil rate allowance in 2008.  It will be over 12 years before they fulfil that “promise” and even then it will be subject to many restrictions.

For more information

Contact Alex Elphinston, Donna Holmes or  James Hall.