Some couples may now be able to leave £1,000,000 free of Inheritance Tax.
The new tax year started on 6th April 2020 and any person who dies on this day or in the future will be entitled to the maximum residential nil-rate band (RNRB) allowance, if their estate qualifies. The RNRB allowance started in 2017 with £100,000 nil-rate band per person attributable to your own residence. This RNRB has increased by £25,000 every year until it has reached the maximum of £175,000. The RNRB benefits people leaving their home to their lineal descendants being their own children, step-children or grandchildren. Therefore, not everybody will qualify. The relief is complicated and there are other conditions that apply.
Essentially, most people who leave their home to their lineal descendants and have an estate worth less than £2,000,000 will be able to take advantage of the residential nil-rate band. Many people will now have a standard nil-rate band of £325,000 plus the RNRB of £175,000 making a total of £500,000. If a couple pass their whole estate to each other then potentially the couple could have a joint tax-free estate of £1,000,000. This will of course depend on the value of the home which would need to be worth in excess of £350,000 unless you have downsized and there is still a possibility of being able to claim the maximum of £350,000
If you have any questions regarding the residential nil-rate band or any Wills or probate questions, then please contact our Probate Team who will be delighted to chat with you.
