Married couples and civil partners urged to take note of RNRB changes
This week, married couples and civil partners are being urged to take note of new changes to the residence nil rate band (RNRB) – an important Inheritance Tax (IHT) allowance which could save families who wish to pass on residential property in their Wills a lot of money in tax.
As of today, changes to the RNRB mean that individuals who wish to leave property to their children, grandchildren, foster children or step children in their Wills can pass on an additional £125,000 in property value completely free of IHT.
This is on top of each individual’s standard £325,000 tax-free allowance or nil rate band.
Prior to today, the RNRB was only worth £100,000 – but under existing rules, this additional allowance is set to rise by £25,000 each April until 2020.
Married couples and those who are in a civil partnership can perhaps enjoy the best benefits of the changes, as such couples are able to combine their individual allowances.
This means that as of today, if a married couple wishes to pass on a residential property to their children, for example, that couple can potentially pass on £900,000 completely tax-free if they take advantage of the RNRB.
It is important that individuals and families who are thinking of leaving behind a legacy seek specialist legal and tax planning advice – as neglecting these areas could cost dear.
IHT is levied at a rate of 40 per cent in the UK and research suggests that an increasing number of British estates are falling foul of the tax, while many Britons are failing to seek specialist advice in good time.
Up-to-date data from HM Revenue & Customs (HMRC) suggests that the Treasury collected a staggering £5.3 billion in IHT last year alone – up 13 per cent on the amount collected the previous year.