RESIDENCE NIL RATE BAND
Paying tax is unpopular, particularly Inheritance Tax, which is normally levied on estates of deceased persons at the rate of 40% above a tax free threshold.
You might not be aware that a potentially useful new tax-break for your estate was introduced on 6 April 2017?
What is it?
Residence Nil Rate Band, is a new threshold below which your estate will not pay Inheritance Tax.
It only applies to your main residence on your death and it can be added to the general ‘Nil Rate Band’ tax threshold below which your estate will not pay Inheritance Tax.
How much is it?
The new threshold is £100,000.00 per person in tax year 2017/2018 rising by £25,000.00 each year until it reaches £175,000.00 in the 2021/2022 tax year, following which it will increase in line with the Consumer Prices Index.
The threshold is capable of being transferred on the first death in a marriage or Civil Partnership to the survivor on their subsequent death and it could therefore be worth £350,000.00 in tax year 2021/2022.
When does it apply?
The legislation which introduced the new threshold is complex as numerous conditions must be met in order to take advantage of it. Whether or not the new threshold will be applicable to your estate will depend on your familial and financial circumstances.
It is therefore important to take professional legal advice on the new threshold when making or updating your Will.
Contact Stephen Roberts in our Private Client Department – 01638 564492- for further advice regarding this.