Financial Planning for Step Children 2 - RNRB
Published / Last Updated on 17/01/2022
The Residence Nil Rate Band (RNRB) for Inheritance Tax of currently £175,000 per person added to the existing nil rate band of £325,000 means that each person that owns a property has an inheritance tax band of allowances totalling £500,000.
For a married couple or civil partnership, on first death and provided part of the allowances have not already been used and therefore, passed on to a surviving spouse could have a combined inheritance tax allowance £1,000,000.
The RNRB of £175,000 (or £350,000 if a surviving spouse + their deceased partner’s RNRB combined) only applies if property is passed on to direct descendants.
For RNRB purposes the direct descendant is:
- a child, grandchild or other lineal descendant
- a husband, wife or civil partner of a lineal descendant (including their widow, widower or surviving civil partner)
Direct descendants do not include nephews, nieces, siblings and other relatives who are not included in the list above and below.
This also includes:
- a child who is, or was at any time, their step-child
- their adopted child
- a child fostered at any time by them
- a child where they’re appointed as a guardian or special guardian when the child is under 18
The person who inherits the home does not have to be under aged 18.
Step Child/Children
A person’s step-child is only someone whose parent is, or was, the husband, wife or civil partner of the deceased person.
