The recent Budget led many to believe that major changes to death duty are finally here. But the small print of the changes has left estate planning specialists scratching their heads.
“Families have been waiting decades for a new Nil-Rate Band that recognises the increase in house prices and allows couples to pass on family homes without penalty,” explains Paul Dodsworth – Wills and Trusts expert at Estate Planning Solutions.
Paul continues: “But despite all of the fanfare, these new rules won’t come into effect before 2017 and they won’t be rolled out fully before 2020. This will leave many of our clients without any respite from HMRC for two more years”.
The newly announced Nil-Rate Band (NRB) is not to be introduced until 2017, when the tax free allowance for those passing on their main residence (currently £35,000) will rise by £100,000 per person (£200,000 for a married couple). This will then rise in £25,000 increments every year until 2020. This finally allows £500,000 per-person, or £1Million for a couple – the figure grabbing all the headlines.
“House prices have been soaring for over 20 years, leaving many families with houses worth well in excess of £500,000 to £750,000. This is through no fault of their own – especially if they live in London,” continues Paul. “The added delay is not a welcome one, for many. Some may still be forced to sell their houses before the new bands are introduced”.
The changes themselves have been widely welcomed by many in the estate planning industry. But they will not apply to everyone. Good forward planning and management of your assets is still recommended if you want to avoid burdening loved ones with large Death Duty bills when you pass away.
“With the delay meaning that current rules apply for another two years at least, it’s still worth talking to an expert”, concludes Paul.
Estate Planning Solutions have a blog detailing the changes. You can read it by clicking here.
If you would like to discuss how the changes will affect you and your loved ones, or if you’re planning for your future, call Estate Planning Solutions on 0800 781 6658.