Home in on new rules for inheritance

INHERITANCE TAX is payable upon death, at a rate of 40 per cent, on the value of an individual’s net estate above £325,000, known as the nil-rate band (NRB). Since October 9, 2007, on the passing of a spouse or civil partner, it has been possible to transfer any unused part of that person’s nil-rate band to the survivor’s estate. This then resulted in a maximum uplift to £650,000 of the estate of the surviving spouse or civil partner, legally referred to as the “transferable nil rate band” (TRNB).

This band has now been enhanced for a number of people.

From April 6, 2007, an additional £100,000 residence nil-rate band (RNRB) has been made available on top of the NRB and TNRB. This sum will be increased by £25,000 per year, so by 2020/21 an additional £175,000 will be available.

The NRB will remain frozen throughout this period, meaning that for those spouses and civil partners who are able to meet all the required conditions, they can transfer the RNRB, the TRNB and the NRB between them, so their combined inheritance tax relief in 2020/2021 will total £1 million.

However, as you can imagine, there are a number of conditions that need to be met to benefit from this change.

The deceased must have had a home or a share of one at their time of passing or at some point since the policy was announced on July 8, 2015.

If they had more than one residence, the estate can elect which one to choose.

If someone has sold their home or moved to a less-valuable property since