We Have No Children – Can We Still Make Use of the New Main Residence Allowance?

My wife and I have been happily married for 30 years but we were never able to have children. We’ve built up a reasonable estate over the years which we’d like to leave to our nephews and nieces. However, it seems that the new main residence allowance doesn’t extend to this kind of transfer. Can this be true?

Question asked by Paul Koppel

Unfortunately, as it stands, the new main residence allowance or main residence nil-rate band (MRNRB) won’t be applicable to family members that aren’t direct descendants.

When the new allowance came into force in April of 2017 it will initially extended a £100,000 allowance to every UK resident who left their main residence to one of their children (including adopted, foster or step children), their grandchildren or to their children in joint names with their respective spouses.

Main Residence Nil-Rate Band and Childless Couples

This means that by the 2020 tax year, when the main residence allowance has risen to £175,000, the average childless couple will be £350,000 worse off than couples with just a single child when it comes to inheritance tax. Any unused main residence allowance can also be passed between spouses, although this will also be redundant for childless couples.

For the time being, those who don’t have direct descendants to whom they can leave their main residence will be unable to make use of this allowance.

Although the inequity of this suggests that we might see the law amended at some point in the future, for now those unable to make use of the new nil-rate band will find themselves facing larger potential inheritance tax bills than their peers and will need to act accordingly.

Need Inheritance Tax Advice?

Speak To Our Expert Advisers
Verified by Norton Symantec icon
 Or Call Us

Frequently Asked Questions

Contact Us

Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Drewberry London Office MapDrewberry Brighton Office Map

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.