On 8th July HMRC issued a statement setting out some of the detail about this proposal. The Devil is certainly in the detail!
Even now we will have to await the legislation before some details become completely clear.
A number of points have however become clearer.
The additional nil rate band (ANRB) will only apply when a residence is passed on death to a direct descendant. Direct descendant will be a child (including a stepchild, adopted child or foster child) of the deceased and their lineal descendants.
The property has only to have been the residence of the deceased “at some point” and be included in their Estate. If you own more than one property at your death then your Executors can choose to which property the relief is to apply. The relief can only be offset against one property and not split between a number of properties. No definition of “residence” is yet available but it will no doubt require some degree of permanency or at least the intention of permanency.
The Government proposes that the relief will still be available if the deceased has “downsized” or sold their only residence during their lifetime. Once again how this will operate in practice is unknown.
The relief will only be available from 5th April 2017 and will then be worth £100,000, increasing, in stages, until it is worth £175,000 from 5th April 2020. In the meantime the existing nil rate band (of £325,000) will remain frozen until April 2021.
If however a person downsizes or ceases to own a home on or after 8th July 2015 the ANRB will still be available in respect of deaths after 6th April 2017.
The relief will be transferable between spouses and civil partners – presumably in the same way as the existing transferable nil rate allowance. A claim to the transferable allowance will have to be made in the usual way.
The relief is further restricted in the following ways:-
Conclusion
The relief is certainly not as simple as was suggested in the initial announcement.
There is a significant amount of detail which is still unclear. It is not clear whether the relief will apply to properties, or a share in a property, that is owned by a trust but, because of the way in which Inheritance Tax works, we believe this may be the case.
Given the various restrictions the relief will be of limited benefit.
If you or your parent(s) have sold a property it will be sensible at this time to ensure you keep a copy of the statement giving details of the sale price etc as well as copies of Council Tax and other utility bills where possible and other mail as evidence of occupation. This should help in any future claim for the relief.
The Tory Party first talked of introducing a £1,000,000 nil rate allowance in 2008. It will be over 12 years before they fulfil that “promise” and even then it will be subject to many restrictions.
Contact Alex Elphinston, Donna Holmes or James Hall.
The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
The government announced on 16 May that it will provide a fund of £400m to cover the costs of removal and replacement of cladding to high rise residential blocks which have failed tests.
Whilst some people are under the impression that preparing a Lasting Power of Attorney (LPA) is simply a case of completing a form and ticking a few boxes, it is about far more than this.
A big fear for some people facing divorce and the inevitable carving up of the matrimonial assets. They seek assurances that such assets will be “ring-fenced” and retained for them.
Thinking about the legal status of being a cohabitant probably isn’t at the top of the ‘to do’ list.
When an individual is thinking about making a gift to another individual, consideration needs to be given to the Potentially Exempt Transfer (PET) trap.
We are now only a few weeks away from the biggest change to data protection laws in over 20 years. Are you compliant?
The tragedy, in this case, is that there were options readily available to the midwives that they could have used. This was not a case of having to go above and beyond.
Arising from the recent Family Division announcement, people who think they are legally divorced may in fact still be married.
The SCCS has issued providers in the scheme a series of updated and new documents in order to assist with their National Minimum Wage review.
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