We have been contacted by clients who have been reading about the new “Residential Nil Rate Allowance” which was introduced in April this year. It will give a welcome, additional, tax free amount of inheritance tax to people who own a family home and are leaving it to children, step-children or grandchildren.
Many of the leaflets and articles circulating about the new Residential Nil Rate Allowance warn that you will lose this allowance if your house passes into a trust for your children, step-children or grandchildren, rather than to them directly. This is partly true, but actually whether you will get the extra allowance would depend on the type of trust. There are also different rules depending on whether your children or grandchildren are inheriting your house.
To complicate matters, historically, many straightforward Wills use the words ‘on trust’ when making a gift, even where there will not necessarily be any ongoing trust! So, if you see these words in your Will, please do not panic. That said, it is worth reviewing your Wills in light of the introduction of the Residential Nil Rate Allowance, to make sure that they are as tax efficient as possible.
If you have any concerns or have any questions, we would be pleased to speak with you.
Telephone 01458 850146 or email firstname.lastname@example.org