Question: As a home owner, I am confused about what Chancellor George Osborne’s recent “emergency Budget” means for me. Some of my friends at work have told me that changes have been made to inheritance tax with regard to residential property.
My wife and I bought our house 20 years ago for about £350,000, and it is now worth more than £800,000.
We own the property jointly and want to make our wills to leave everything to our son and daughter when we die. Are these budget changes going to affect us?
Answer: It is certainly important to make a will if you want to. Indeed, if you want to pass on your family home to your children after the second of you has died, there are new measures in the summer Budget that can help to reduce your liability to inheritance tax.
Currently, a married couple has what is called “a joint nil-rate band of £650,000”, above which inheritance tax applies at a rate of 40 per cent.
The Budget has introduced an additional nil-rate band that will apply if your home is passed on to a child or grandchild upon your death.
This band will be £100,000 in 2017-18, £125,000 in 2018-19, £150,000 in 2019-20, and £175,000 in 2020-21.
The new nil-rate band will be gradually withdrawn for estates with a net value of more than £2 million, at a rate of £1 for every £2 over this threshold.
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These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.