Inheritance Tax - The Million Pound Relief

Resident Nil Rate Band

The 'Resident Nil Rate Band' came into force on 6 April 2017.  It applies, in addition to the existing Nil Rate Band of £325,000.

This means, in short, if an estate satisfies certain conditions, they can immediately benefit from the additional tax relief of £100,000 which will rise in annual increments of £25,000 to £175,000 in 2021. The RNRB can also be transferred between spouses. 

The following conditions must be satisfied:
 

1. The estate includes the deceased’s UK residence.

2. The residence passes to a direct descendent.

The consequence of the availability of both the reliefs is that a married couple who own their own home, and have a combined estate of £1 million can, by 2021, leave their entire estate to their direct descendants without an Inheritance Tax liability.
 
A word of caution

The rules relating to the RNRB are complex and as a result your Will may now need to be reviewed.  For example a will containing a trust for the benefit of people who are not direct descendants will not qualify.
 
For further information, contact Vanessa Whittington by email at vwhittington@mslaw.co.uk or by telephone on 01530 266000.