Changes to UK Inheritance Tax in 2017 – what is the impact to you?

Next year will see the implementation of the Residence Nil Rate Band (RNRB). In basic terms, if you are leaving a property to a direct descendent, an additional £100,000 will be added to your Inheritance Tax threshold. A direct descendant can be a step child, an adopted or foster child.

This allowance will be increased annually as the policy is rolled out completely by 2020. A couple will have a £1million threshold in 2020. It only applies to property gifted at death, not in life. A property can pass by survivorship, not just by will. It does not have to be your residential property and if you have more than 1, you can nominate. If you downsize, the full allowance will still apply to the wealth released.

However certain trusts and interests in are not covered by this allowance. It will be tapered for estates over £2million. There are some benefits to the changes for those with a simple estate and uncomplicated family life. With so few simple families and ever increasing property prices, the impact of this change is likely to be minimal to most of us.