RNRB Calculation

arongunningham

We have a client who has an estate of £2,168,000. Their spouse has died and the estate was valued under £2m at the time.

They have left 100% of their estate to each other.

My calculation for the taper of RNRB is:

•  £168,186 / 2 = £84,093
•  £250,000 - £84,093 = £165,907

However, CashCalc have applied to taper twice to both slices of allowance:

•  £168,186 / 2 = £84,093
•  £125,000 - £84,093 = £40,907
•  £40,907 x 2 = £81,814

The only technical articles I have seen on this have said the inherited RNRB is applied before tapering.

Does anyone know which is right?

richardgough

From my understanding of the RNRB you assess the percentage of used / unused RNRB on 1st death in a similar way for NRB. From what you say this is 100%. This is the uplift and then taper applied.

On this basis I believe your calc is correct.

Have a look at https://www.tax.service.gov.uk/calculate-additional-inheritance-tax-threshold/date-of-death

benjaminfabi

I agree with Richard and you are right Aron.

RNRB gets uplifted first, then tapered, That's how I've read it.

arongunningham

Thanks for the sense-check.

I've gone back to CashCalc and they're looking into it.