Section 8E — Inheritance Tax Act 1984: Residence nil-rate amount: interest in home goes to descendants etc

Residence nil-rate amount: interest in home goes to descendants etc 8E 1 Subsections (2) to (7) apply if—

a the person's estate immediately before the person's death includes a qualifying residential interest, and b N% of the interest is closely inherited, where N is a number—

i greater than 0, and ii less than or equal to 100, and in those subsections “ NV/100 ” means N% of so much (if any) of the value transferred by the transfer of value under section 4 on the person’s death as is attributable to the interest.

2 Where—

a E is less than or equal to TT, and b NV/100 is less than the person's default allowance, the person's residence nil-rate amount is equal to NV/100 and an amount, equal to the difference between NV/100 and the person's default allowance, is available for carry-forward.

3 Where—

a E is less than or equal to TT, and b NV/100 is greater than or equal to the person's default allowance, the person's residence nil-rate amount is equal to the person's default allowance (and no amount is available for carry-forward).

4 Where—

a E is greater than TT, and b NV/100 is less than the person's adjusted allowance, the person's residence nil-rate amount is equal to NV/100 and an amount, equal to the difference between NV/100 and the person's adjusted allowance, is available for carry-forward.

5 Where—

a E is greater than TT, and b NV/100 is greater than or equal to the person's adjusted allowance, the person's residence nil-rate amount is equal to the person's adjusted allowance (and no amount is available for carry-forward).

6 Subsections (2) to (5) have effect subject to subsection (7) and sections 8FC and 8M(2B) to (2E) .

7 Where the person's residence nil-rate amount as calculated under subsections (2) to (5) without applying this subsection is greater than VT—

a the person's residence nil-rate amount is equal to VT, b where E is less than or equal to TT, an amount, equal to the difference between VT and the person's default allowance, is available for carry-forward, and c where E is greater than TT, an amount, equal to the difference between VT and the person's adjusted allowance, is available for carry-forward.

8 See also— section 8FC (modifications of this section where there is entitlement to a downsizing addition), section 8H (meaning of “qualifying residential interest” , “qualifying former residential interest” and “residential property interest” ), section 8J (meaning of “inherit”), section 8K (meaning of “closely inherited”), and section 8M (cases involving conditional exemption).