The Residence Nil Rate Band for Inheritance Tax provides a greater death nil rate band if an individual dies and leaves their family home to their children, grandchildren, step children or adopted children.
The normal Nil Rate Band is increased from £325,000 to £500,000, thus providing increased relief from Inheritance Tax being charged at 40%.
It is possible to transfer any unused nil rate band and any unused family home allowance on the death of the first spouse to a surviving spouse/civil partner. The result will be that the total Inheritance Tax allowance for the surviving spouse/civil partner will be increased to an amount up to £1m.
The residence nil rate band has a tapered restriction and withdrawal for Estates with a net value of more than £2m at the rate of £1 for every £2 in excess of the threshold. It should be noted in making this assessment, reliefs such as Business Property Relief (BPR) and Agricultural Property Relief (APR) are ignored.
It is possible to successfully plan to mitigate Inheritance Tax exposure and we would recommend individuals consider their potential Estates and the taxation liabilities which could arise. Speak to us if you would like any specific advice or assistance.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.