Why inheritance tax changes are leaving thousands reviewing their will
As the new tax year was ushered in on 6th April 2018, so too was an additional £25,000 in inheritance tax savings as the Residence Nil Rate Band increased to £125,000.
However, not everyone will be entitled to the savings and millions of people could miss out unless they amend their will.
To see if you need to review your will in order to qualify for the latest savings, call Future Planning Solutions on 01282 695400.
What is the Residence Nil Rate Band?
First introduced in April 2017, the Residence Nil Rate Band gives some people additional inheritance tax allowance on top of the usual £325,000 per person (£650,000 for married couples and civil partnerships).
This ‘top up’ started at £100,000 in 2017/18 and will rise by additional £25,000 per year. By the time the changes are fully rolled out in 2020/21, a couple will be able to pass on a property worth £1 million free of tax.
Who qualifies for the Residence Nil Rate Band?
The Residence Nil Rate Band only applies to a property being passed on to a ‘direct descendent’. This includes children, step children, adopted children and grandchildren.
Brothers, sisters, nieces, nephews and other family members will not be able to benefit from the Residence Nil Rate Band; even if you have no direct descendants.
To qualify for the Residence Nil Rate Band, the property must have been your main residence at some point.
Although you will not have to be living in the property at the time of your death, business properties and buy-to-let properties will be excluded.
Is your home in a trust?
If your home is currently in a discretionary trust, you may need to amend your will in order to qualify for the tax savings brought about by the Residence Nil Rate Band.
Discretionary trusts used to be popular amongst couples as they allowed them to combine both their tax allowances. However due to the new changes, anyone with their home in a discretionary trust could miss out on thousands of pounds in inheritance tax savings.
At Future Planning Solutions, we would advise anyone with their home in such a trust to speak to a solicitor for advice on their estate planning. You can read more on the benefits of estate planning before making your will here.
Speak to the expert will writing solicitors at Future Planning Solutions
To find out whether the Residence Nil Rate Band could affect your will, speak to the dedicated solicitors at Future Planning Solutions.
Our specialist will writing solicitors can offer expert advice on the options available to you and amend your will to suit your needs where necessary.
To talk to one of our trusted solicitors today, call us on 01282 695 400.
Or, If you’d like to receive a call back from a member of our legal team, you can complete our online contact here.
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