The residence nil-rate band, also referred to as the ‘family home allowance’, will come into effect from 6 April 2017.
The allowance is an addition to the £325,000 nil-rate band for inheritance tax and will apply to those passing on a home to a direct descendent.
The band begins at £100,000 for 2017/18 and will increase by £25,000 each tax year until it reaches £175,000 in 2020/21.
|Tax year||Residence nil-rate band||Individuals: maximum nil-rate band||Married couples and civil partners: maximum nil-rate band|
Married couples or those in a civil partnership can pass on any used allowance to their spouse or partner.
The band will only apply if you pass on a property to a direct descendent such as a child, grandchild or other lineal descendent.
The band is also limited to just a single property so if you own one residential property and have also lived in it, it can be eligible for the allowance.
For any help or advice with financial planning talk to RPD