Sarah Nash, Solicitor and Head of Astle Paterson’s Wills and Probate Department discusses the changes which will come into force on 6th April 2017 to Inheritance Tax liability.
Sarah said “The present position in respect of Inheritance Tax (IHT) is that each person has a tax-free allowance of £325,000 available upon their death. Married couples have a total tax allowance of £650,000. Gifts made within seven years of death can reduce these allowances and the allowances are not automatically granted by HMRC. The terms of your will are also relevant when considering the operation of these allowances.
However, as of 6th April 2017 an additional tax allowance known as the Residence Nil Rate Band (RNRB) will be available for deaths on or after the 6th April 2017. The RNRB will only apply when a residence is inherited by a lineal descendant – i.e. by the deceased’s children or grandchildren.
The RNRB will be £100,000 in 2017/18 and is due to rise by £25,000 each year until it reaches £175,000 in 2020/21.
Of note is the fact that the additional Nil Rate Band is withdrawn at the rate of £1 for every £2 by which the estate of the deceased exceeds £2million and will therefore not be available for larger Estates unless some planning is undertaken now to secure the allowance.”
Sarah concluded “Wills should be reviewed to ensure that maximum use is made of all available tax allowances, including the RNRB.”
For further advice please call our Wills and Probate Department direct on 01283 743969 or contact them by email at firstname.lastname@example.org.
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