Inheritance Tax – new exemption for residences
31st August 2017For deaths occurring on or after 6 April 2017, an additional exemption is available where a residence passes to a direct descendant. At the moment, this amounts to £100,000 but it’s set to increase over the next few years, to a maximum of £175,000 in April 2020. Commonly known as the Residence Nil Rate Band (RNRB), this new exemption will ultimately increase the combined value that can pass IHT free on the second death to £1million.
HMRC have just issued new guidance illustrating how the RNRB can be transferred when not used by the estate of the first individual in a marriage or civil partnership to die. You can view this guidance here
They’ve also just issued guidance on how the relief operates when a property passes on Trust, or is already held on Trust – Trusts and IHT
You can be forgiven for thinking that that this is not a straightforward relief. And HMRC’s new description of the RNRB as the ‘Additional Threshold’, and what had always been known as the Nil Rate Band as the ‘Basic tax-free threshold’ is hardly helpful.
We can offer advice and guidance on IHT planning and compliance, including full probate services. Contact us if you need help.
Disclaimer - All information in this post was correct at time of writing.