On the 6 April 2017, there will be a major change to Inher­i­tance Tax (IHT) with the intro­duc­tion of the Res­i­dence Nil Rate Band (RNRB). Many peo­ple are famil­iar with the Nil Rate Band for IHT, where you do not pay tax on assets up to £325,000 (or £650,000 for mar­ried couples/​civil part­ners). How­ev­er, the RNRB intro­duces a Nil Rate Band for IHT on the val­ue of your res­i­dence in addi­tion to the stan­dard Nil Rate Band.

To qual­i­fy for the RNRB you must sat­is­fy the fol­low­ing criteria:
• The death occurs on or after the 6 April 2017,
• The deceased owns their own home or a share of one,
• The home will be inher­it­ed by the individual’s direct descendants,
• The total val­ue of the Estate is less than £2million

The RNRB will increase year­ly until 2021 on the fol­low­ing scale:
• £100,000 for the tax year 2017 – 2018
• £125,000 for the tax year 2018 – 2019
• £150,000 for the tax year 2019 – 2020
• £175,000 for the tax year 2020 – 2021

The stan­dard Nil Rate Band will be frozen until 2021 to allow for the large increas­es in the RNRB. The aim is that by 2021, a mar­ried couple/​civil part­ner­ship will be able to leave £1million of assets to their direct descen­dants with­out pay­ing IHT. This will be made up of £175,000 RNRB plus the Nil Rate Band of £325,000 which equals £500,000 per indi­vid­ual, dou­bled up for a mar­ried couple/​civ­il part­ner­ship to £1million.

While the basic prin­ci­pal is straight­for­ward, to make the most of the exemp­tion we rec­om­mend you take spe­cial­ist legal advice as there are addi­tion­al rules in rela­tion to:
• What con­sti­tutes the home” for the pur­pos­es of the rules
• Down­siz­ing, sell­ing or giv­ing away your home after 8th July 2015
• Trans­fer­ring RNRB between mar­ried cou­ples and civ­il partners
• Who is a direct descendant”
• Taper­ing the relief where the total Estate exceeds £2 million
• Homes held in trusts

If you would like to dis­cuss any of the above and/​or make sure your Will takes advan­tage of the RNRB, please con­tact Nico­la Lloyd on 01625 523 988 or email mail@​JBGass.​com