Although the Chancellor had plenty of surprises in his Spring Budget, there were no big revelations when it came to inheritance tax.
However, announcements from previous statements are still in the pipeline and it is worth making note of one particular change which will impact home owners as part of their estate planning.
From the 6th April 2017 there will be a new ‘main residence nil rate’ band (MRNR) in addition to the normal nil rate band of £325,000 which will be frozen at this level until 2020/2021 tax year.
The new rate will start at £100,000 and increase at £25,000 a year until in 2020/2021 it will reach £175,000.
This entitlement will only be available on death and it will be for the main home which is passed on to lineal descendants: children, grandchildren, great grandchildren (children includes step children and adopted children). The allowance will also be transferable to spouses and those in a civil partnership.
The amount of relief will be the lower of the net value of the property and the maximum MRNR available. The property will only qualify if it has been the main residence of the deceased at some point.
The relief will be tapered away from estates with a net value over £2 million at the rate of £1 for every £2 which means that it will reach nil for estates of £2.35 million in 2020/2021.
At Moore Thompson, we can guide you through the, often bewildering, legislation relating to Inheritance Tax and help you sort out your estate-planning so that you have peace of mind.
We can provide expert advice to assist taxpayers who believe their estates may be liable to a future IHT liability, to maximise tax efficiency and assist executors in dealing with inheritance tax returns and making payments. For more information on how we can help, please contact us.