What is NRB?
£325,000 – the tax free allowance, or Nil Rate Band, you can leave to your beneficiaries before your estate pays Inheritance Tax.
Do I have to pay Inheritance Tax?
If your estate (property, money and possessions) is worth more than £325,000 at the time of your death, your estate will be liable to pay Inheritance Tax (IHT).
£325,000 is the tax free allowance, or Nil Rate Band (NRB) the Government says you can have before your estate has to pay IHT.
The current IHT rate is 40% on anything above the nil rate band. IHT is usually paid out of your estate after you die but before your family or beneficiaries inherit the residual estate – or what remains after payment of tax!
Potential changes being introduced in 2017 will allow homeowners an additional £175,000 tax free allowance on their main residence.