When the Conservative party introduced the new Residential Nil Rate Band (RNRB) in 2017, many people believed that their homes would automatically be exempt from inheritance tax - and as a result have not given the matter much thought ever since. Because of this, a significant proportion of over-45s are completely unaware that this may not be the case and that their property may still fall within the scope of the tax.
At first glance the generous exemption of £175,000 per person (from 6 April 2020) coupled with the standard Nil Rate Band of £325,000 meant that a married couple could effectively exempt up to £1m worth of assets from inheritance tax, thus keeping the party's manifesto promise.
However, on closer inspection this additional allowance has turned out to be a more complicated character than would first appear. There are strict criteria as to who can inherit property in order to benefit from the allowance. Such criteria potentially include unmarried partners, siblings and unadopted step-children. There is also a £2m cap on the value of the estate which can claim the allowance.
There are also rules about properties left to trust ( a planning tool beloved of the early noughties) as well as complex calculations relating to properties which have been downsized.
The answer of course is a professional review of wills and tax planning strategies which may not have been considered for a number of years and particularly since the 2017 changes.
The lack of awareness around inheritance tax (IHT) in the UK has increased in the last year, with half (50%) of over-45s admitting to be unaware their main property could be subject to IHT.