Property owners, including personal representatives and trustees, are being made aware of a valuable addition to the existing Nil Rate Band (currently £325,000) which comes into force this week.
From 6 April 2017, the Inheritance Tax Residence Nil Rate Band (RNRB) will apply to residential property included in a person’s estate.
An estate may be eligible for the RNRB if:
- an individual dies on or after 6 April 2017.
- an individual has an interest in a home, or a share of one, which is included in their estate.
- an individual’s direct descendants such as children or grandchildren inherit the home, or a share of it.
- the value of the estate isn’t more than £2 million (at which point the RNRB is gradually withdrawn).
Any unused RNRB can be transferred to the estate of the deceased’s spouse or civil partner even if the first of the couple died before 6 April 2017.
An estate may also be entitled to the RNRB when an individual has downsized to a less valuable home or sold or given away their home after 8 July 2015.
Lawyer Amy Allison of Langleys Solicitors said that the new downsizing rules mean an individual does not have to own a property at the date of their death.
Amy said: “If a person sold or disposed of a property and downsized, their estate can still benefit from the RNRB.
“It’s important to note that the RNRB is limited to a residential interest in property and nothing else in a person’s estate. In order to assist with a future claim all records and documentation relating to any disposals of property since 8 July 2015 should be kept.”
Amy added that the introduction of the RNRB provides an opportunity for individuals as well as personal representatives and trustees of estates to take stock and review.
“Now is a good time to plan and review an estate and take professional advice on whether the new RNRB applies to you,” said Amy.
For more information on the RNRB, contact Amy Allison at Langleys Solicitors at firstname.lastname@example.org