Inheritance Tax: main residence nil-rate band and the existing nil-rate band
Who is to be affected?
Individuals with direct descendants who have an estate (including a main residence) with total assets above the Inheritance Tax (IHT) threshold (or nil-rate band) of £325,000, and personal representatives of deceased persons
General description of the new measure
An additional nil-rate band when a residence is passed on death to a direct descendant
This 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 increase in line with Consumer Prices Index (CPI) from 2021 to 2022 onwards. Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.
The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants. The exsisting nil-rate band will remain at £325,000 until the end of 2020 to 2021.