Sue Grogan, Managing Director of Joined-Up Working has written this guest blog. Sue talks about real life experiences of why it is important to have a Will and a Power of Attorney. Story 1 My Uncle Paul died years ago aged 59, leaving Auntie Penny...
A new tax year and changes to the Inheritance Tax rules
- AuthorHannah Howe
The new tax year began on 6th April, and brought with it changes to the Inheritance Tax rules. The Residence Nil Rate Band has been increased, and benefits people leaving property to their children and grandchildren.
Inheritance Tax - how can you benefit?
If your estate qualifies, you can now leave up to £1m free of Inheritance Tax. However there are certain conditions that apply, and the new allowance won’t benefit everyone.
Everyone has their own Nil Rate Band of £325,000. Married couples and civil partners also benefit from the Transferable Nil Rate Band and so between them, can leave up to £650,000 free of Inheritance Tax.
Leaving property to children and grandchildren?
The Residence Nil Rate Band started in April 2017 and gives an additional tax-free allowance to people who are leaving property to children and grandchildren. This started off at £100,000 and, this tax year, has risen to £175,000. Married couples and civil partners can also benefit from each other’s unused Residence Allowance, which means they can leave a total of £1m without paying any Inheritance Tax, if they are leaving property worth at least £350,000 to their children.
The Residence Nil Rate Band only applies to property left to “lineal descendants” – this means children and grandchildren, but does also include stepchildren, adopted children and foster children. If you have no children or grandchildren, you cannot benefit from this relief.
If you used to own property but you have since down-sized, or sold your home to pay for care, then you can still benefit from these tax reliefs. To qualify, you will need to be leaving the value of property you used to own to children or grandchildren.
Contact one of our Inheritance Tax specialists
This is a complicated tax relief, but maximising this and the other available reliefs can mean your estate pays less Inheritance Tax. To find out if you qualify, or to discuss this further, please contact one of our Inheritance Tax specialists.