Nia Wharry, Partner, Head of Wills & Estate Planning
– From 6th April the residence nil rate band came into effect. This article provides vital information on how it will work. If you need any advice on the Inheritance Tax changes and how they affect you specifically, please contact us.
The residence nil rate band (RNRB), which comes into force over the next three tax years from 6 April, in a nutshell will enable couples with a home to pass on up to £1 million to their direct family free of inheritance tax.
But a survey by Old Mutual Wealth found an alarming level of ignorance about the RNRB. Seventy per cent of respondents knew nothing about the new rule, and even among those who considered themselves knowledgeable got some of the details wrong.
As things stand, the first £325,000 of someone’s estate is free of inheritance tax – an allowance known as the nil rate band (NRB). The new allowance will mean that someone who owns a home has an extra chunk of tax-free allowance. For estates worth more than £2 million the new allowance will be gradually tapered away.
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