New legislation has been brought in which may reduce the amount of Inheritance Tax payable.
The Residential Nil Rate Band (RNRB) is a new Inheritance Tax allowance in addition to the existing Nil Rate Band allowance.
The current Nil Rate Band allows you to leave up to £325,000 per person to any other than your spouse, civil partner or charity without paying Inheritance Tax.
Who will qualify for RNRB?
Individuals with direct descendants who have an estate (including a main residence) with total assets above the Inheritance Tax threshold (or nil-rate band) of £325,000 and personal representatives of deceased persons may qualify for the new RNRB.
The Residential Nil Rate Band is being introduced in stages over the next 4 years. This will be:
- £100,000 in 2017 - 2018
- £125,000 in 2018 - 2019
- £150,000 in 2019 - 2020
- £175,000 in 2020 - 2021
To qualify for the RNRB, the person who died must have left their home, or a share of it, to their direct descendants (children, step children, adopted children, foster children, grandchildren, and great-grandchildren).
The estate may also qualify if the person downsized to a lower value property, or sold or gave away their home on or after 8 July 2015.