Do you know that inheritance tax has changed?

19th May 2017

If you or a loved one dies after 6 April 2017 your estate may qualify for the new additional residence nil rate band.

What were the previous rules?

Under the previous rules, an individual could leave £325,000 before any inheritance tax may have become due.

What are the new rules?

From 6 April 2017, up to an additional £100,000 per person may be claimed if their family home or a share of it is left to a direct descendant, rising to £175,000 per person in 2020. This is called the residence nil rate band.

For married couples and civil partners, any unused residence nil rate band from the first spouse’s death may be transferred to the surviving spouse or civil partner’s estate. This can be done even if the first person died before 6 April 2017.

Who do the new rules apply to?

The residence nil rate band is available for all individuals, married couples and civil partners who leave their property or a share of it to a direct descendant.

Who is a direct descendant?

A direct descendant is a child or children (including a step-child, adopted child or foster child) or grandchildren of the deceased and their descendants.

Is there a limit on the size of the estate?

Yes, for estates valued at more than £2 million, the residence nil rate band will be gradually withdrawn or tapered away.

What are the new thresholds?

The residence nil rate band will be introduced in the following stages:

  • £100,000 in 2017 to 2018;
  • £125,000 in 2018 to 2019;
  • £150,000 in 2019 to 2020; and
  • £175,000 in 2020 to 2021.
What if I have given away my house or downsized?

If you have given away your home or downsized after 7 July 2015 your estate may still be entitled to the additional residence nil rate band.

Do I need to change my will?

Maybe. Although the new rules will work with most people’s current wills, some wills may need to be changed to ensure that their estate will benefit from the new rules. For example, if your will contains a discretionary trust then the residence nil rate band cannot be claimed.

For more advice or a free 30 minute consultation please Marie Tisdale on 01543 267981 or email Marie at