Skip to content
Law Society of Scotland
Search
Find a Solicitor
Contact us
About us
Sign in
Search
Find a Solicitor
Contact us
About us
Sign in
  • For members

    • For members

    • CPD & Training

    • Membership and fees

    • Rules and guidance

    • Regulation and compliance

    • Journal

    • Business support

    • Career growth

    • Member benefits

    • Professional support

    • Lawscot Wellbeing

    • Lawscot Sustainability

  • News and events

    • News and events

    • Law Society news

    • Blogs & opinions

    • CPD & Training

    • Events

  • Qualifying and education

    • Qualifying and education

    • Qualifying as a Scottish solicitor

    • Career support and advice

    • Our work with schools

    • Lawscot Foundation

    • Funding your education

    • Social mobility

  • Research and policy

    • Research and policy

    • Research

    • Influencing the law and policy

    • Equality and diversity

    • Our international work

    • Legal Services Review

    • Meet the Policy team

  • For the public

    • For the public

    • What solicitors can do for you

    • Making a complaint

    • Client protection

    • Find a Solicitor

    • Frequently asked questions

    • Your Scottish solicitor

  • About us

    • About us

    • Contact us

    • Who we are

    • Our strategy, reports and plans

    • Help and advice

    • Our standards

    • Work with us

    • Our logo and branding

    • Equality and diversity

  1. Home
  2. For members
  3. Journal Archive
  4. Issues
  5. September 2017
  6. The residence nil rate band – are your clients affected?

The residence nil rate band – are your clients affected?

In association with Tilney: some circumstances in which the additional allowance cannot be claimed
18th September 2017 | Alison Fitzsimons

The residence nil rate band was introduced in April 2017 as a new allowance for passing on the family home. For people who plan to leave their property to children or grandchildren, the allowance could reduce an inheritance tax bill significantly.

Discretionary trusts don’t qualify

The family home doesn’t have to be passed on directly. The allowance is still available if property is given through certain types of trust, including 18 to 25 trusts, bereaved minor trusts and disabled persons’ trusts. As long as the trust gives the child the right to use or occupy the property and then becomes part of their estate after your death, the residence nil rate band can be claimed.

But notably this list does not include discretionary trusts, even if the children are the intended beneficiaries. Many wills use discretionary trusts to distribute assets in line with the wishes of the deceased, and this can be a particularly complex area.

Tapered allowance for bigger estates

The residence nil rate band is tapered off for estates worth more than £2 million. For every £2 your estate is valued over £2 million, your allowance is cut by £1. This means the allowance will disappear completely for estates worth more than £2.35 million after April 2020.

The way that HMRC calculates the value of your estate for the residence nil rate band is slightly different to the usual inheritance tax calculation. For example, business relief assets and gifts made to charities are included when assessing whether the allowance should be tapered.

If one of your clients has set up a discretionary trust in their will, or their estate is valued above £2 million, they should speak to a financial planner about how they can make the most of the residence nil rate band.

The Author

Alison Fitzsimons is an associate director with Tilney in Scotland and heads up our strategic partnership with the Law Society of Scotland. She can be contacted on 0333 014 5429 or at lawscotland@tilney.co.uk www.tilney.co.uk   For professional advisers only. The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Please note we do not provide tax advice.
Share this article
Add To Favorites
https://lawware.co.uk/

In this issue

  • Talaq and the growing challenge of overseas divorces
  • Too close to the wind? (1)
  • The Land Register: two ticking timebombs
  • Adult ADHD: a performance management issue
  • Reading for pleasure
  • Opinion: Sandra McDonald
  • Book reviews
  • Profile
  • President's column
  • ScotLIS enters user test phase
  • People on the move
  • Priced out of justice
  • The residence nil rate band – are your clients affected?
  • State aid outside the EU
  • IP actions at the Court of Session
  • Give me liberty or give me a welfare attorney
  • Personal injury trusts and professional trustees
  • How to protect your firm and your clients from email fraud
  • Court to child: a different approach
  • Who can appeal a contempt ruling?
  • Moveable property: reform at last?
  • Too close to the wind?
  • Limited partnerships and the PSC register
  • Scottish Solicitors' Discipline Tribunal
  • Recent changes to the PSG offer to sell
  • Assigned standard securities
  • On our own feet
  • OPG tackles rising demand for PoAs
  • Law reform roundup
  • PI court timetable amended
  • Reception greets Accredited Paralegal scheme
  • Making paper history
  • Your Law Society of Scotland Council members
  • Master Policy renewal: it's easy online
  • Ask Ash
  • AML risks and company services
  • Thinking of getting engaged?
  • Q&A corner

Recent Issues

Dec 2023
Nov 2023
Oct 2023
Sept 2023
Search the archive

Additional

Law Society of Scotland
Atria One, 144 Morrison Street
Edinburgh
EH3 8EX
If you’re looking for a solicitor, visit FindaSolicitor.scot
T: +44(0) 131 226 7411
E: lawscot@lawscot.org.uk
About us
  • Contact us
  • Who we are
  • Strategy reports plans
  • Help and advice
  • Our standards
  • Work with us
Useful links
  • Find a Solicitor
  • Sign in
  • CPD & Training
  • Rules and guidance
  • Website terms and conditions
Law Society of Scotland | © 2025
Made by Gecko Agency Limited