This is a new allowance, which was announced in the last Budget and formed part of the Conservative Party’s election manifesto.
It will operate on gifts of a residence under a person’s Will from 2017 onwards, providing an exempt allowance of £100,000, rising to £175,000 in the Tax Year 2020-2021. Proposals have just been put forward which will mean that, if a person downsizes or disposes of their property before they die and assets of an equivalent value are passed on to their descendants, comprising their children and grand children and their spouses effectively, the relief will still be able to be claimed.
These rules seem to be designed so as not to put people off from disposing of their homes or downsizing, simply because they are worried about losing this extra allowance. It seems likely that the rules will be complex but there is some time still before they come into effect. Once these new proposals are in effect, it would be important for everyone whose assets could potentially face Inheritance Tax to make a Will or review their existing Will in order to ensure that this extra allowance is obtained.
To speak to one of our Specialists about making a Will or reviewing your existing Will, please phone (01267) 237441.