Couples can now leave up to £1 Million inheritance tax free
6 April sees the start of a new tax year, which often brings about new tax thresholds and allowances, including Inheritance Tax: if a person dies on or after 6 April 2020 their estate may benefit from the maximum Residence Nil Rate Band (RNRB) allowance, if their estate qualifies for it.
The relief was introduced in April 2017 with, at that time, £100,000 RNRB per person and has been increasing by £25,000 each year until now when it has reached £175,000. This is in addition to the Nil Rate Band which remains at £325,000.
The allowances are transferable between spouses which means two NRBs totalling £650,000 and two RNRBs totalling £350,000 can be available, totalling £1 million.
There are three factors which must be met for the estate to qualify for the full RNRB*: 1) the deceased must have owned a property and lived in it; 2) the property must have been left to the deceased’s descendants (including step-children and step-grandchildren) and 3) the total value of the estate is valued below £2 million.
*Note: there are some circumstances whereby your estate may qualify for all or part of the RNRB if it does not meet all of the above criteria, please contact us for bespoke advice.