Inheritance Tax Changes 2017
Changes are being made to Inheritance Tax which may benefit people who want to pass on their estate including their home to their spouse and immediate family.
If you give your whole estate to your spouse or civil partner you will apply for the existing tax-free threshold of £325,000 (the Nil-Rate Band, NRB) which can then be used on the second death to gain a tax-free threshold of £650,000 at the moment.
From 6th April 2017 you will also qualify for the Residential Nil-Rate Band (RNBR) for estates worth up to £2 million. The RNBR will apply when a home is being passed on to closely inherited lineal family including children or grandchildren and step children. The RNBR can also be transferred to your spouse to use on the second death if ultimately the home passes to your children and so on. You may also be allowed to apply for the RNBR if half your house is put in trust after the first death and also if you downsize your home or move to a retirement home.
The RNBR is being phased in each year starting in the 2017/18 tax year:
- 2017-18: £100,000
- 2018-19: £125,000
- 2019-20: £150,000
- 2020-2021: £175,000
Your Will may need to be updated to make the most of this new tax-free allowance but we also suggest you review your will every five years.
For further information on the changes please contact Livingstons on 01229 585555