One of the more predictable elements of the summer Budget was the introduction of a new ‘Property Nil Rate Band’, which will mean that eventually individuals can pass on a further £175,000 tax free to their direct dependents, in addition to the current £325,000 nil rate band that exists at present.
As with all new legislation however, there are some things to be aware of.
First of all, the new allowance will be introduced in tranches as follows:
- 2017/18 – £100,000
- 2018/19 – £125,000
- 2019/20 – £150,000
- 2020/21 – £175,000
These amounts are given with reference to the date of death of the deceased.
In addition, the new Nil Rate Band will only apply to a family home (i.e your main residence), passed onto direct descendants, which in the legislation are taken to mean children and grandchildren. There is some further consultation on where the property could be left to certain types of trust.
As with all new legislation, it is important to review you current plans to make sure you get the full benefit. Any older will that include gifts into trust, may not be eligible to claim the new nil rate band, and this could also be true for those who do not own a home, or who choose to leave their home to people not considered to be direct descendants.
We will be covering the new changes in detail during our updated Estate Planning Seminars, running from September onwards. You find out more information here.