Up to £1million Inheritance Tax allowance now available for couples
The 6th April 2020 brought the start of a new tax year and with it a further increase in the Residence Nil Rate Band for Inheritance Tax.
6 April 2020 brought the start of a new tax year and with it a further increase in the Residence Nil Rate Band for Inheritance Tax.
The Residence Nil Rate Band was introduced in April 2017. It was introduced initially at £100,000 per person and has increased incrementally over the last 3 years. For deaths on or after 6 April 2020, the maximum Residence Nil Rate Band of £175,000 per person can now be claimed. Any future increases in the allowance are set to rise in line with inflation.
For married couples (and couples with a registered Civil Partnership), the additional increase could now result in a £1million allowance from Inheritance Tax if their estates meet the relevant criteria.
The £1million allowance for married couples and Civil Partners comprises of:
- Ordinary Nil Rate Band (2 x £325,000) = £650,000
- Residence Nil Rate Band (2 x £175,000) = £350,000
To qualify for the Residence Nil Rate Band allowance, you must:
- Own your home (or have done since 8 July 2015); and
- Pass assets to your children or grandchildren on your death; but
- The allowance is reduced if your estate is worth more than £2million.
The rules are complex and wills made before April 2017 are unlikely to take into account the Residence Nil Rate Band. To ensure your estate maximises the available allowances, it is important to seek professional advice and our team of estate planning specialists can assist.
If you have any questions or would like to know more please contact Lorraine Wilson, Solicitor on 0161 214 0532 or firstname.lastname@example.org.