PART I GENERAL
Rates
F18EResidence nil-rate amount: interest in home goes to descendants etc
(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 F2on 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) F3and 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—
F4(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—
F5section 8FC (modifications of this section where there is entitlement to a downsizing addition),
section 8H (meaning of “qualifying residential interest” F6, “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).