What the changes to the UK nil rate band mean for IHT planning
By Kirsten Hastings, 31 Mar 17
A staggering 70% of people have no understanding of the new residence nil rate band allowance coming into force on 6 April, which could have serious implications for their inheritance tax planning, warns Old Mutual Wealth financial planning expert, Rachael Griffin.
The residence nil rate band (RNRB) allows a family home to be passed on to direct descendants free of inheritance tax.
An estate will be entitled to the RNRB if the:
- individual dies on or after 6 April 2017;
- individual owns a home, or a share of one, so that it’s included in their estate;
- individual’s direct descendants such as children or grandchildren inherit the home, or a share of it; and,
- value of the estate isn’t more than £2m ($2.5m, €2.3m).
Griffin said: “With the new residence nil rate band coming into force […], it is alarming that 70% still have no understanding of the new allowance. Even those who claim to have a good understanding of the residence nil rate band failed to correctly answer some questions on the detail of the new legislation.
“The lack of understanding around the new rules could result in people not structuring their will or their financial affairs in the most effective way.”
Click through the slides above to read about the five things that even those who claimed to have a good understanding of the RNRB didn’t know.
Tags: IHT | Nil Rate Band | Old Mutual | Rachael Griffin
