New Inheritance Tax Allowance to save families up to £1m by 2020
Posted on April 26th 2017
The Residence Nil Rate Band (RNRB) is now available to people who want to pass on their home to family members.
Inheritance Tax is a tax paid on the estate (property, money and possessions) of someone who has died.
Before the introduction of the new Residence Nil Rate Band estates worth more than £325,000, or £650,000 for married couples/civil partners, had to pay 40% inheritance tax on anything above the threshold.
However, with the introduction of the new Residence Nil Rate Band on April 6th, if you leave your home to your children (including adopted, foster, or stepchildren) or grandchildren, your estate can now claim the new allowance of an additional £100,000.
This could mean some big savings for some families. The savings are set to increase by £25,000 annually over the next few years. By April 2020, the RNRB will have increased to £175,000 per person. Furthermore, after April 2020 the increase each year will be in line with inflation.
Unfortunately, there are some restrictions on the new allowance. The new allowance does not allow the home to be left to nephews, nieces, siblings, or discretionary trusts. The new allowance will also be tapered if your estate is worth more than £2m.
Your existing Will should be reviewed to ensure that your estate can claim the new allowance! You can click through to learn more about our Wills services here.
Don’t fall into the sibling trap
Recently, insurer LV= suggested that 1 in 10 over-55’s have written a will leaving their family home to a sibling rather than their children. If this relates to you, you should re-write the will in order to take advantage of the nil rate allowance.
Contact our Wills & Probate solicitors today by filling in our contact form or calling us on 01244 312306!
Call and speak to a lawyer on 01244 312306