The residential nil rate band

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Inheritance Tax

An additional nil rate band in respect of residential property will come into effect for deaths on and after 6 April 2017. The additional nil rate band will start at £100,000 for 2017/18 and increase by £25,000 a year until it reaches £175,000 for 2020/21. It applies to residential property which is left on death to direct descendants only and will be reduced if the value of an individual’s estate is more than £2million.

Any unused residential nil rate band can transfer to the surviving spouse in a similar way to how unused nil rate band can transfer to the surviving spouse. The rules are somewhat complex and there will consultation in the autumn with legislation being introduced in the Finance Act (No2) 2015 and the Finance Act 2016.

For further information or advice on how this will impact your own estate planning, please contact us.

Nicola Sunderland is a Trust and Estate Planning Practitioner in the Private Client team at Barker Gotelee, Suffolk solicitors