You might need to change your will
One tax change that we haven’t highlighted yet in our discussions about the Budget is the “main residence nil-rate band” (MNRB). The MRNB is an allowance that has been introduced into inheritance tax calculation, and applies if an individual’s interest in a residential property is left to children or grand-children.
MRNB is currently worth £100,000 per person in addition to the normal allowance of £325,000 and it is due to rise by £25,000 a year until April 2010 when it will be worth £175,000. At this point couples or civil partners will be able to pass on a £1m inheritance tax-free. Estates over £2m lose the relief at a rate of £1 for every £2 over the threshold.
Key rules to look out for are that the residence must be the family home and that discretionary trusts are not used. On the death of one partner an unused allowance will pass to the survivor and this could create an inheritance tax charge if the value of the total estate exceeds the allowance limits. This can be mitigated by passing assets to other beneficiaries to reduce the total estate size.
Of course inheritance tax planning is a complex and sensitive subject. If you would like a confidential, no-obligation discussion of how to start the planning process why not involve Lewis Smith & Co. today.
Lewis Smith Co. – Taxation planning experts for Dudley, Stourbridge and Halesowen