Inheritance Tax - Residential Nil Rate Band
The 'Resident Nil Rate Band' came into force on 6 April 2017. It applies, in addition to the existing Nil Rate Band of £325,000.
This means, in short, if an estate satisfies certain conditions, they can immediately benefit from the additional tax relief of £100,000 which will rise in annual increments of £25,000 to £175,000 in 2021. The RNRB can also be transferred between spouses.
The following conditions must be satisfied:
1. The estate includes the deceased’s UK residence.
2. The residence passes to a direct descendent.
The consequence of the availability of both the reliefs is that a married couple who own their own home, and have a combined estate of £1 million can, by 2021, leave their entire estate to their direct descendants without an Inheritance Tax liability.
A word of caution
The rules relating to the RNRB are complex and as a result your Will may now need to be reviewed. For example a will containing a trust for the benefit of people who are not direct descendants will not qualify.
For further information, contact Vanessa Whittington by email at vwhittington@mslaw.co.uk or by telephone on 01530 266000.
