From 6th April 2017 the Government are introducing a new Residence Nil Rate Band, in addition to the usual Nil Rate Band for Inheritance Tax.
Currently each person has a £325,000 tax free nil rate band. This means you only pay inheritance tax if your assets (property and savings etc) amount to more than this. These allowances are transferable between spouses so between a married couple they should have £650,000 tax free allowance between them.
The new residence nil rate band means that if you own a property or a share in a property you can leave this to your direct descendants and you will have an additional tax free allowance. The allowance starts at £100,000 in 2017-2018 but is staggered and so in the next few years it will be:
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
If you have a spouse who passed away before 6th April 2017, you may be able to transfer and use their unused residence nil rate band.
For specific advice as to whether the new legislation applies to you, please click here or contact our office on 01744 454433 to book a Will review.