Budget 2016 – Inheritance Tax

The Treasury website listed the 23 main items announced in the Budget, and IHT was nowhere to be seen.  This is an occasion where no news is good news, and gives a window of opportunity for people to organise their affairs in a tax efficient manner.

It has previously been announced that the existing nil-rate band would remain at £325,000 until 2020, and we have of course also had the announcements of the Residential Nil Rate Band which will apply when people pass their home down to their children or grandchildren on death.   As a reminder,

The Residential Nil Rate band will be phased in from 6 April 2017, so that by 6 April 2020, a couple could leave up to £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Where an estate has a net value of more than £2m, the additional nil-rate band will be withdrawn at a rate of £1 for every £2 over this threshold.

<Feb 2018>
MTWTFSS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Feb 22

No events today
I know Dodd & Co have clients all over the country and beyond but the firm’s home is Cumbria. Cumbria is very special, not just because of the beautiful countryside but because of the people who live and work here. Dodd & Co are at the heart of our communities, raising funds and as volunteers and working as trustees in many local organisations. I often attend the County Young Farmers AGM and enjoy the young farmers’ banter with their county treasurer Rob Wharton. Thank you Dodd & Co - your support makes a real difference to the Cumbria Community Foundation and the people we serve.
-- Andy Beeforth OBE