Exemption from Inheritance Tax on your home – does everyone get it?
The new provisions come into force next April where we are allowed an “extra” tax free allowance for our home when we die – this is in addition to the allowance each individual has of £325,000 (£650,000 for married couples) and should, in theory, mean we pay less Inheritance Tax.
However, these new provisions won’t benefit everyone. Single childless people cannot benefit and neither can married childless couples. This is because the home has to be left to “lineal descendants”. If you have no children, you have no lineal descendants.
If you have made a will, you may want to review it. Your will may be drafted in such a way as to mean that this allowance will be either only partly used up or not used at all depending on who and how you leave your estate. Next year the allowance will be £100,000 going up to £175,000 by the year 2021. This is not something you want to lose.
If you haven’t made a will, making one will ensure you use all of your allowances to save paying Inheritance Tax or at the very least reducing it and at the same time protect your estate for those you want to leave it for.
Contact our Private Client team at PrivateClient@southernslaw.co.uk