Transferable nil rate band (TNRB) meaning

Nil rate band (NRB) and transferable nil rate band (TNRB) Each individual’s estate is assessed for inheritance tax (IHT), but a portion is charged at zero per cent, known as the nil rate band (NRB). For the 2023–24 tax year this stands at £325,000. The government stated in the Autumn Statement 2022 that this figure will be held at the same level until 5 April 2028. See: Autumn Statement 2022—Private Client analysis—Key Private Client announcements. Before 9 October 2007, where the chargeable transfer on death did not fully use the deceased’s available NRB—either because the estate was below the threshold or assets passed to an exempt beneficiary—the associated tax saving was not completely realised. A common illustration is spouses leaving their whole estates to each other under a Will; and, in the absence of a Will, a substantial share, if not the entire estate, often passes to the surviving spouse under the intestacy rules. As transfers between spouses are exempt from IHT, such gifts are not chargeable transfers...

It is common for spouses or civil partners to wish to give gifts to one another, as sharing possessions is a familiar feature of coupledom. This reflects the everyday reality of jointly owned property and pooled resources. The label ‘spouses’ in this Practice Note covers both married pairs and those in a registered civil partnership, of any gender. For clarity, the term is applied inclusively and neutrally. Balancing the pair’s holdings so each enjoys personal financial stability can be prudent, and it also opens up the widest opportunities for tax planning. For instance, where one spouse is taxed on income at a higher rate than the other, it is logical to shift more income-producing assets to the spouse taxed at lower rates. An equivalent approach works for capital gains tax (CGT): aim for each spouse to use their annual exemption on chargeable disposals and to be taxed at the lowest rates available. Since spouses may transfer assets between themselves without triggering inheritance tax (IHT), CGT or income tax, there is...