Inheritance Tax

Inheritance Tax: main residence nil-rate band and the existing nil-rate band

The much anticipated main residence IHT relief was announced in the Budget.

The additional nil-rate band will be phased in from 6 April 2017, so that by 6 April 2020, a couple could leave £1m without any IHT being payable.

The additional nil-rate band is available where a residence is passed on death to a direct descendant.  The additional nil-rate band will be £100,000 in 2017-18, £125,000 in 2018-19, £150,000 in 2019-20, and £175,000 in 2020-21.  It will then increase in line with Consumer Prices Index (CPI) from 2021-22 onwards. Any unused proportion of the additional nil-rate band will be able to be transferred to a surviving spouse or civil partner irrespective of when the first of the couple died.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.  The qualifying residential interest will be limited to one residential property but personal representatives will be able to nominate which residential property should qualify if there is more than one in the estate. A property which was never a residence of the deceased, such as a buy-to-let property, will not qualify.

Where an estate has a net value of more than £2m, the additional nil-rate band will be withdrawn at a rate of £1 for every £2 over this threshold.

It had previously been announced that the existing nil-rate band would remain at £325,000 until 2018-19, but the Chancellor has announced that the tax free band will stay at that level until 2020-21.

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Nov 25

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Dodd and Co are a professional friendly organisation who have supported me with my business start up  and still are!  A brilliant group.
-- Lyn Osbaldeston