UK Inheritance Tax: Increased nil-rate band

The British government published Finance (No. 2) Bill 2015-16 on 24 March 2016. The Bill implements changes announced at the Budget for 2016-2017 and implements specifically  changes anounced at Summer Budget 2015. One of the changes is the increased nil-rate band for inheritance tax.

HMRC published a guidance on this topic. The main aim of the legislative measure is descibed as follows:

At Summer Budget 2015, the government announced it will phase in a new residence nil-rate band (RNRB) from 6 April 2017 when a residence is passed on death to a direct descendant.

It will be:

• £100,000 in 2017 to 2018
• £125,000 in 2018 to 2019
• £150,000 in 2019 to 2020
• £175,000 in 2020 to 2021

It will then rise in line with the Consumer Price Index (CPI) from 2021 to 2022. This will reduce the burden of Inheritance Tax for most families by making it easier to pass on the family home to direct descendants without a tax charge.

The guidance can be found here.

Author: Peter Scheller, Steuerberater – Master of International Taxation

Bildquelle: www.fotalia.com