A elderly couple stand outside their property. The house has a red roof and is hidden by long grasses, suggesting it might be beside the sea

ATT Budget Representation - IHT Simplification

19 February, 2024

The ATT has submitted a Spring Budget 2024 representation recommending that Inheritance Tax is simplified by merging the nil rate band and the residence nil rate band. 

The residence nil rate band (RNRB) is a complex IHT relief that is available to some estates in addition to the nil rate band (NRB). While it would come at a cost, we consider that IHT could be both simplified and made fairer by merging the RNRB and NRB into a single nil rate band.

The creation of the RNRB has introduced substantial complexity into the administration of IHT. The provisions are not clear or easy to understand. It also creates distortions, as two estates of equal value can have different IHT liabilities depending on the value of residential property held by the deceased and whether or not they have children who are inheriting that property. We consider that removing the RNRB and increasing the NRB to compensate would make the IHT system simpler and fairer.