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Teaching young lawyers old tax tricks

John Bunker discusses using nil rate band discretionary trusts to assist with resident nil rate band planning

27 June 2017

We have become so used to the transferable nil rate band (TNRB) for inheritance tax (IHT) in the last ten years, some younger UK practitioners will be unfamiliar with the nil rate band discretionary trust.

NRB D/Ts were one way, prior to October 2007, of getting ‘two bites of the cherry’, two IHT NRBs. While many have continued using NRB D/Ts as a valued planning tool, they could have a whole new lease of life following the introduction of the residence nil rate band (RNRB) for IHT. This opens a new chapter in IHT planning, major re-thinking of strategies required, so where do NRB D/Ts fit in?

RNRB is lost by taper when an estate is over £2m. For capital over £2m an effective marginal rate of IHT of 60 per cent, follows losing relief – £1 for every £2 over £2m – on top of the normal 40 per cent IHT. So a big issue for man...

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