New Residence Nil-Rate Band Allowance: Time to review your Will

Sarah Nash, Solicitor and Head of Private Client at Astle Paterson discusses the effect the new Residence Nil-Rate Band Allowance may have on a person’s Will.

Sarah said, “Whilst most people will have heard that the Government introduced a new Inheritance Tax allowance in April this year called the Residence Nil-Rate Band Allowance, many people may not really understand how this allowance works or know whether it affects their Will.

The Residence Nil-Rate Band is an additional Inheritance Tax allowance available for deaths on or after the 6th April 2017 where a residence or interest in a residence is closely inherited by a ‘lineal descendant’.  This term includes children, grandchildren and stepchildren).

Moreover, where a widow or widower dies on or after the 6th April 2017, the allowance of their deceased spouse can be claimed, even though their spouse’s death occurred before this date.”

Sarah continued, “In basic terms, the allowance will start at £100,000 per person for the 2017/2018 tax year and then increase by £25,000 each tax year until 2020/2021 when it will then increase in line with the consumer price index.

The rules determining the availability of the allowance are complex and, understandably, it has been assumed by some that this allowance is just simply added to the standard Inheritance Tax allowance.

Unfortunately, it does not work in that way and, in fact, the allowance will be capped to the value of one residence. Estates worth more than £2 million will see the allowance tapered away, which may encourage spouses to leave assets away from each other, and where the residential interest has been left in the Will to a trust, the allowance may not be available at all, dependent on the type of trust inheriting it.”

Sarah concluded, “With all of this in mind, it is an appropriate time for Wills to be reviewed to ensure that the benefits of the new allowance are not lost.”

Astle Paterson is currently offering a free 30 minute Will Review Consultation – please contact our Head of Private Client Sarah Nash on 01283 531366 or by email at to arrange an appointment.

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