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2015 budget

The Budget – Inheritance Tax relief on family homes.

| Published on July 8, 2015

Adam Scott, Associate Solicitor at Humphries Kirk solicitors in Bournemouth comments:

“The Government has long promised to increase the Inheritance Tax Nil Rate Band (where the IHT rate is effectively 0%) to £1million. So, what does that mean for us?

“The headline is still there, but the Government has gone about it in a roundabout way.

“The current rules that an individual has a Nil Rate Band of £325,000 and that, where Spouses or Civil Partners inherit the entire estate of the first Spouse or Civil Partner to die, each Nil Rate Band will be added together to provide a combined Nil Rate Band on the second death of £650,000 remain.

“However, in addition, a person will be able to claim an additional £175,000 in respect of the family home. Hence, home owning married couples and civil partners will have an effective Nil Rate Band of £1million (£650,000 + £175,000 + £175,000).

“Of course it would have been much easier for the Government to simply raise the Nil Rate Band to £1million but the UK tax system is anything but simple. As ever, the devil will be in the detail and it remains to be seen how the new rules will work in practice.

“In any event, the new rules do not come into force until the 2017/2018 tax year and so it is important not to relax too soon. It remains vital to begin any form of tax planning sooner rather than later.”

For more information or advice on Inheritance Tax please contact Adam Scott

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