How might the Inheritance Tax changes affect you?
April 2017 will see a potential increase in the inheritance tax allowance on death if you own the home you live in and have children.
For some, not much will change, but for others, large inheritance tax savings could be made, provided that your Will or intestacy correctly gifts your home to your direct decedents.
What will change?
The current inheritance tax free allowance per individual is £325,000. Married couples have an inheritance tax free allowance of £650,000.
If your death occurs on or after 6 April 2017, an additional inheritance tax free allowance could be available to your estate if you own your own home and leave it to your child or children (including a step-child, adopted child or foster child), or their children.
Over the next five years, the additional allowance per individual (doubled for married couples) will be phased in as follows:-
- £100,000 for 2017 to 2018
- £125,000 for 2018 to 2019
- £150,000 for 2019 to 2020
- £175,000 for 2020 to 2021
This allowance, however, applies to your residence only (the home you live in). If the value of your home is less than the allowance, the surplus allowance cannot be used against any other part of your estate – it is lost. The definition of residence is a property lived in at some stage before death. There is no minimum period but you must have lived there. Buy-to-let properties are specifically excluded.
If, however, you do not have direct decedents or do not own your home, unfortunately, nothing changes for you, as you are unable to use the additional allowance.
Why choose Johnson & Gaunt?
If the change in inheritance tax will benefit you and you decide now is the time to make that Will you have been thinking about, why not contact us?
The thought of writing your Will can be stressful but often is not once you speak to someone helpful. We are a local, approachable firm, whose friendly and efficient staff can guide you through the processes involved.
For more information and assistance please contact Sarah Horton in our Banbury office on 01295 759400 or firstname.lastname@example.org or Teresa Ingarfield in our Chipping Norton office on 01608 643051 or email@example.com