Inheritance Tax Act 1984 section 8FB

Downsizing addition: entitlement: no residential interest at death

Section 8FB sets out the conditions under which an estate qualifies for a downsizing addition to the residence nil-rate band where the deceased no longer owned a home at the date of death, and explains how the addition is calculated.

• The deceased must have previously owned a qualifying residence but must not hold any residential property interest in their estate at the date of death.
• The value transferred on death must be greater than nil, and at least some of the estate must be closely inherited — that is, passed to direct descendants.
• The downsizing addition equals the lost relievable amount (the residence nil-rate band lost when the property was disposed of), but is capped at the value of assets in the estate that are closely inherited.
• A claim must be made for the addition, and the amount may be reduced in cases involving conditional exemption from inheritance tax.