If you own a property and on your death you leave this property to a direct descendent (or your spouse or civil partner in the first instance) your estate will benefit from an additional threshold of £100,000 taxed at 0%.
A direct descendent is a child, grandchild etc but also includes step children, adopted children and foster children.
The property must have been used as your residence at some point throughout your period of ownership. Although it did not need to be your main residence and if you owned two properties which were both used as residences, your executors can elect to set the RNRB against whichever property has the highest value. The RNRB cannot be set against pure buy to let properties.
The RNRB is set to increase over the next few years:
The RNRB will be available to those individuals who have downsized or moved into a care facility in their lifetime. The property had to be owned after 8 July 2015 and assets of an equivalent value must still pass to a direct descendent.
There will be a tapered withdrawal of the RNRB for estates with a net value of more than £2million. This will be at a rate of £1 for every £2 over the threshold.
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.