Changes to UK Inheritance Tax from April 6th 2017

Changes to UK Inheritance Tax from April 6th 2017

Changes to UK Inheritance Tax from April 6th 2017

by | Inheritance

The new Residential Nil Rate Band comes into effect on 6th April for all UK citizens passing after this date.  What are the changes and how do they affect you?

The RNRB attempts to bring Inheritance Tax exemption levels in line with ever increasing UK property prices.  The family home is probably the largest proportion of most people’s wealth.  Most families will want it to pass to their descendants.

Previously an individual’s tax exemption was £325,000 on their worldwide estate.  For a married couple, this can be shared.  This creates an exemption of £650,000.  If you live in London or have multiple properties worldwide, this is probably insufficient to cover the value of your family home.

The new RNRB is being raised in stages.  The first increase to the nil-rate band is £100,000 today.  There will be additional annual increases of GBP25,000 from 6 April 2018.  This will mean a RNRB of a maximum of £175,000 by 6 April 2020.

If you leave your home to your spouse of a lineal descendant, the additional exemption can be applied.  If your home is not left entirely to your spouse or children, the additional band is apportioned according to the amount gifted.

Applying the RNRB is a complicated process.  If you have a valuable home and wish to to leave it to your family, or elsewhere, you should seek tax advice to ensure the most you can gift to your family reaches them after your death.

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