A new Inheritance Tax free allowance called the Residence Nil Rate Band (RNRB) has now come into force and applies to deaths on or after 6 April 2017. The RNRB will apply when a residence passes to the deceased’s direct descendants or where there are additional funds within an estate following a decision by the deceased to downsize.
The RNRB is available in addition to the standard Nil Rate Band which is currently set at £325,000. As with the standard Nil Rate Band, the RNRB will be transferable between spouses and civil partners on death.
The new legislation will be introduced gradually over four years with the allowance worth £100,000 in 2017/2018, £125,000 in 2018/2019, £150,000 in 2019/2020 and £175,000 in 2020/2021. Estates that are worth more than £2 million will lose some or all of RNRB which will be tapered at a rate of £1 for every £2 over the £2 million threshold.
In light of the above changes, you should consider reviewing your Wills, particularly if your Will includes trust provisions, to ensure that your estate can benefit from the allowance.
If you require any further advice in relation to amending your Wills, or putting Wills in place, please do not hesitate to contact Katie Gillam from our Private Client team on 01892 515022 or email: firstname.lastname@example.org