IHT Residence Nil Rate Band

IHT RNRB

Didn't find your answer?

My client lives in job related accommodation and currently does not own a property.  He is no longer married but has adult children. He is looking to buy a house to let and, whilst an election can be made for it to be treated as his PPR for CGT purposes, he is unsure (and so am I) if the £175K RNRB will be applied if he leaves the house to his children on death as he may not have lived in it.

Does residnece have to be physical or can it be deemed?

At the moment he is not sure if he will live in the property when he retires.  He may sell it and buy another retirement home.

Replies (6)

Please login or register to join the discussion.

avatar
By Tax Dragon
26th Jul 2021 09:17

Presumably* he is in fact intending to live in it, based on what you say.

Why does he care about the RNRB? Is it actually going to change anything he does? If not, why worry? (FWIW I very much doubt it's in point, but those sections 8 ain't the easiest of reads... but you'll know that, as presumably* you've looked**.)

* I'm doing too much presuming. Aweb is giving me bad habits.
** If not, it's s8H that answers your question.

Thanks (1)
RLI
By lionofludesch
26th Jul 2021 12:28

"At the moment he is not sure if he will live in the property when he retires. He may sell it and buy another retirement home."

Surely this has no relevance to his IHT problem ?

Thanks (0)
Replying to lionofludesch:
avatar
By mbee1
26th Jul 2021 15:09

lionofludesch wrote:

"At the moment he is not sure if he will live in the property when he retires. He may sell it and buy another retirement home."

Surely this has no relevance to his IHT problem ?


At the moment he lives in job related accommodation and he's looking to buy a house that he may or may not live in when he retires. At the moment he intends to live there but he's still some way off so will rent it out. Clearly his intention to live in it may change and he may well ultimately not live in.

His question is that, if he were to die before he ever lived in it, would it qualify for relief as a deemed residence rather than an actual residence.

Perhaps I didn't make myself clear. I don't usually deal with IHT.

Thanks (0)
Replying to mbee1:
avatar
By Hugo Fair
26th Jul 2021 18:27

Have a read of https://www.tolley.co.uk/media/knowledge-files2/Tolley-CGT-Diploma_PPR-c... ... in particular note:
* that a period of absence can only be treated as a period of deemed occupation if it was both preceded and followed by a period of actual, physical occupation. TCGA 1992, s.223(3)"
* "Where the owner was absent from the property due to working elsewhere – either as an employee or as a self-employed trader – that period of absence will also qualify as deemed occupation. Here the period of deemed occupation is limited to a maximum of four years. TCGA 1992, s.223(3)(c)"

Thanks (2)
Scooby
By gainsborough
27th Jul 2021 10:17

The answer to the IHT part of the question was given by TD above in the first post - it's all in IHTA 1984 s8H (6) but I believe TD's point was that the intention to occupy the property needs to exist as per part b:

If at any time when a person's estate includes an interest in a dwelling-house, the person—
(a)resides in living accommodation which for the person is job-related, and
(b)intends in due course to occupy the dwelling-house as the person's residence, this section applies as if the dwelling-house were at that time occupied by the person as a residence

Thanks (1)
Replying to gainsborough:
avatar
By Tax Dragon
27th Jul 2021 10:39

Which, of course, has to be read in conjunction with ss7, which defines job-related accommodation for IHT purposes. (But somehow the OP already knew those conditions were met.)

Thanks (0)