Shortlands

The Inheritance Tax Threshold (The Nil Rate Bands)

The inheritance tax threshold is £325,000 (the nil rate band). This means that, if the total taxable value of the deceased’s estate is less than £325,000, the estate does not have to pay inheritance tax.

The tax threshold can increase by £175,000 (the residence nil rate band) if the deceased’s home is inherited by the deceased’s children, grandchildren, etc. or by the spouse/widow/widower of the The tax threshold can increase by £175,000 (the residence nil rate band) if the deceased’s home is inherited by the deceased’s children, grandchildren, etc. or by the spouse/widow/widower of the deceased’s children, grandchildren, etc. However, if the estate is worth more than £2,000,000, then the additional £175,000 will be reduced by £1 for every £2 the estate is above £2,000,000. For example, if the estate is worth £2,350,000, there will be no additional £175,000.

The deceased’s tax threshold can also increase if the deceased’s spouse dies before them and the spouse did not use all of their £325,000 tax threshold. The nil rate band will increase in proportion with the amount of the nil rate band that the spouse did not use (the transferable nil rate band). For example if the spouse did not use 20% of their nil rate band, then the deceased’s nil rate band will increase by 20%.

Likewise, the deceased’s tax threshold can also increase if the deceased’s spouse died before them and the spouse did not use all of their residence nil rate band. The deceased’s residence nil rate band will increase in proportion with the amount of the residence nil rate band that the spouse did not use. For example, if the spouse did not use 20% of their residence nil rate band, then the deceased’s residence nil rate band will increase by 20%.

Please note that a different nil rate band will apply if the deceased died before 6 April 2009, no transferable nil rate band will apply if the deceased died before 9 October 2007, and no residence nil rate band will apply if the deceased before 6 April 2017.

Please note that the above is a simplification for illustrative purposes only and should not be relied upon without obtaining specialist probate advice that is specific to your circumstances.

Shortlands Law Firm offer expert advice and assistance in relation to inheritance tax. Please contact us on +44 (0)207 629 9905 or email info@shortlands.co.uk if you would like more advice about this complex area of law

BOOK AN APPOINTMENT

Please fill the form below to arrange your fixed cost initial appointment.

    REQUEST A CALL BACK

    Please fill the form below to request a free call back: