Added on: 10th April, 2018 by Patricia_3139
Since 6th April 2018, if you are married or in a civil partnership, you can now leave up to £900,000 to your direct descendants, free of inheritance tax (IHT).
Direct descendants are described by the government as:
• your children, grandchildren or great grandchildren and their spouses or civil partners
• step children
• adopted children
• foster children
• children who are under your guardianship
The 2018/2019 inheritance tax limit (otherwise known as the nil-rate band - NRB) is £325,000 per person, which can be passed to your spouse or civil partner with no IHT payable, allowing them to then pass on £650,000 to their heirs, tax free when they die. Your heirs will pay 40% inheritance tax on anything above this – unless you are entitled to the additional IHT limit.
In April 2017, the government announced a further IHT free amount of £100,000 per person if you leave property that has been your main residence to your direct descendants. This is known as the residence nil-rate band (RNRB). This is now to be increased to £125,000 per person. Therefore, if you are married or in a civil partnership, you now have the possibility of passing £900,000 to your direct descendants, tax free. The residence nil-rate band will rise by £25,000 per person each year until 2020/2021, when it will be £175,000 and will lead to the £1 million tax-free goal set by the government.
Once an estate reaches £2 million, you will start to lose the residence nil-rate band. You will lose £1 for every £2 of estate. This means that by the time the estate is worth £2.35 million, you will not benefit from the residence nil-rate band.
The RNRB is not available where property is left under certain trusts, such as a discretionary will trust for the benefit of your children or grandchildren. If you have already made a will and have left property in trust for your heirs, you should contact our experts immediately to ensure that you do not lose out on the benefit of the residence nil-rate band.
For more information or advice on inheritance tax - or any issue relating to making your will and planning for your family's future, contact our experts now on 0114 272 9184 or email firstname.lastname@example.org www.graysons.co.uk