Changes could lead to a saving of up to £140,000.

When the government increased the nil-rate band in 2009 to £325,000, it forecast that it would remain the same until 5 April 2021. But in the summer Budget 2015, the government announced it would phase in a new residence nil-rate band (RNRB) from 6 April 2017. This affects inheritance tax (IHT) when a residence is passed on death to a direct descendant, ie children or grandchildren.

The available amount of RNRB will increase yearly as below, taking it when combined with the nil-rate band to £1m for a married couple in 2020/21:

For deaths in the following tax years it will be:

  • £100,000 in 2017/18
  • £125,000 in 2018/19
  • £150,000 in 2019/20
  • £175,000 in 2020/21

The RNRB will be gradually withdrawn or tapered away where the estate value is more than £2m. After 2021, the increase will be in line with the Consumer Price Index.

HMRC has issued full guidance.

Article from ACCA In Practice