New: residence nil-rate band from April

The residence nil-rate band, also referred to as the ‘family home allowance’, will come into effect from 6 April 2017.

The allowance is an addition to the £350,000 nil-rate band for inheritance tax and will apply to those passing on a home to a direct descendent.

The band begins at £100,000 for 2017/18 and will increase by £25,000 each tax year until it reaches £175,000 in 2020/21.

Tax yearResidence nil-rate bandIndividuals: maximum nil-rate bandMarried couples and civil partners: maximum nil-rate band
2017/18£100,000£425,000£850,000
2018/19£125,000£450,000£900,000
2019/20£150,000£475,000£950,000
2020/21£175,000£500,000

£1,000,000

Married couples or those in a civil partnership can pass on any used allowance to their spouse or partner.

The band will only apply if you pass on a property to a direct descendent such as a child, grandchild or other lineal descendent.

The band is also limited to just a single property so if you own one residential property and have also lived in it, it can be eligible for the allowance.

Contact us today to discuss the residence nil-rate band.

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