New Inheritance Tax Rules come into force in April 2017.
These new rules see the introduction of the new “residence nil rate band” (RNRB) for each individual. This will enable a “family home” to be passed wholly or partially tax free on death to direct descendants such as a child or grandchild.
The amount of relief will be phased in over four year and will initially be £100,000 in 2017/2018 rising each year thereafter to reach £175,000 in 2020/2021.
The RNRB may only be used in respect of one residential property which does not have to be the main family home, but must at some point have been in residence of the deceased.
Restrictions apply where estates are in excess of £2 million.
The RNRB is in addition to an individual’s own nil-rate band and any unused nil-rate band may be transferred to a surviving spouse or civil partner.
If more information is required HM Revenue and Customs have produced a clear guide which may help. This can be found on the link below.