The new Residence Nil Rate Band (RNRB) is an allowance for Inheritance Tax (IHT) which has become available in addition to the existing nil rate band of £325,000 per person. It applies to deaths occurring on or after 6 April 2017.
The RNRB allows individuals to leave a house to direct descendants (i.e. children or grandchildren) with part or possibly all the property value being free of inheritance tax. The RNRB, once it has been fully introduced by 2021, could result in a £140,000 IHT saving on the death of the surviving spouse. One important point to note is that the RNRB may not apply where the value of the estate exceeds £2.2 million.
The Residence Nil Rate Band will start at £100,000 per person from April 2017 and increase incrementally by £25,000 per year to a maximum of £175,000 by 2020/21. Beyond 2021, the maximum RNRB will increase in line with inflation.
It is important that you have the right Will in place as, by 2021, it will be possible for couples to pass up to £1 million of estate tax free once the Residence Nil Rate Band is fully implemented.
For further information contact our Stepps office on 0141 779 2577 or firstname.lastname@example.org