The new financial year saw the introduction of the Residence Nil Rate Band ("RNRB"), which promises to offer individuals an additional relief from Inheritance tax, on top of their current tax free allowance of £325,000.
The RNRB operates to give homeowners an additional relief of up to £175,000 to deduct from their solely or jointly owned property and is set to increase yearly for deaths in the following tax years:
- £100,000 in 2017 to 2018
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
The legislation is complex and the circumstances under which the RNRB will apply are subject to restrictions and may require amendments to your Will.
One issue which has already arisen is that of grandchildren who have been left a share of the property upon reaching a specified age in a Will (such as at 18 or 21). Where those grandchildren are under the age of entitlement at the time of your death, their share of the property will be held on trust for them until they reach this age, instead of passing to them outright. Unfortunately this could mean that your estate will not attract the full RNRB and your loved ones could end up paying more tax than they would have otherwise had to. On this basis, it may be advisable to simply remove the reference to a specified age altogether when it comes to grandchildren, unless there is a good reason for doing so.
In order for your estate to take advantage of the RNRB and ensure that your Will is drafted in the most tax efficient manner, we recommend you contact our experienced Wills, Trusts and Probate lawyers to discuss this in more detail. We offer a friendly and reliable service and we look forward to hearing from you.
Please email us using the link at the top of the page or call to book an appointment on:
01603 620508 (Norwich)
01502 573307 (Lowestoft)
01953 607724 (Wymondham)