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The Chancellor has now announced a Special IHT exemption for family homes in his recent budget.
It is important to note that this exemption will take the form of an Additional Nil Rate Band, when a residence is passed on death to a direct descendant. It could take therefore a Home Owning Married Couple’s Nil Rate Band to £1,000,000 in a lot of cases.
The difficulty however is that it is being phased in as follows:-
The Ordinary Nil Rate Band, i.e. if you do not have a family home will remain frozen at £325,000 until April 2021.
The additional Nil Rate Band will only apply for the main residence or the proceeds from it’s disposal is passed to direct descendants. It is tapered for estates worth over £2,000,000.
Therefore if we have an executry with a main residence, or proceeds from the sale going to children the Nil Rate Band, an example to April 2018, will increase to forming £425,000; to April 2019 it will be to £450,000; to April 2020 it will be to £475,000; and to April 2021 it will increase to £500,000.
With a couple therefore potentially the effective Nil Rate Band by April 2021 for a couple with their own house going to children will in most cases increase to £1,000,000.
For more information on changes to IHT Nil Rate Band, contact our team of lawyers, who offer clear and affordable legal advice on any aspect of the law governing wills, executries or powers of attorney.
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