Government has introduced a new allowance for Inheritance Tax in addition to the current Nil Rate band of £325,000 per person
It is called Residence Nil Rate Band ( RNRB )
Where a person dies on or after 6 April 2017 and leaves the home to direct descendants ( and this includes step-children ) an additional allowance of £100,000 will be available. This will rise annually until 2020 when it reaches £175,000
This means that if a person leaves their home in a Will to direct descendants the estate will only start to pay Inheritance Tax if the total estate has a value of more than £425,000 ( rising to £500,000 in the tax year 2020/1 )
Married couples who have this additional allowance will enjoy a combined allowance of £850,000 (rising to £1,000,000 in the tax year 2020/1 )
The RNRB is transferable between spouses and civil partners in the same way as the current transferable Nil Rate Band
The RNRB is preserved even if a person downsizes or disposes of the property prior to death as long as the equivalent value passes to direct descendants
For estates valued over £2,000,000 the RNRB will be tapered away by £! for every £2 that the net value exceeds that figure.
Make sure your Executors understand these provisions
