In April 2017, the Government introduced the Residence Nil Rate Band (RNRB) which provides an additional allowance for married couples where the surviving spouse leaves their property to direct descendants (i.e. children, grandchildren, step-children). The intention was to reduce the burden of inheritance tax for families and make it easier to pass property down to younger generations.
As of 6th April 2020, the RNRB increased to £350,000 for a married couple. The RNRB is available in addition to the basic nil rate band which stands at £650,000. The good news is that this means a married couple could leave up to £1 million inheritance tax-free to their direct descendants. Estates above this value will normally incur an inheritance tax liability at 40%.
Where an individual’s estate is valued at more than £2 million, the RNRB is progressively reduced by £1 for every £2 that the value of the estate exceeds the threshold.
Although the RNRB means that you could be paying less inheritance tax, you have to comply with a number of strict conditions and it may be that the terms in your current Will do not meet these conditions.
It is important to take professional estate planning advice and review your current Will to ensure that the residence nil rate band can be claimed and consider any other relevant exemptions in order to maximise the wealth you are passing on to your family.
Our friendly team can provide you with up-to-date advice on the recent changes to the residence nil rate band and help you to plan for the future. For more assistance with your estate planning or Will, please contact our Aalia Ijaz in our Wills team on 0161 475 1218 or email [email protected].