Cranleigh, Surrey, GU6 8RZ, UK
01483 266 666
enquiries@oakwoodms.co.uk
Oakwood Mortgage Services Oakwood Mortgage Services
  • Mortgages
    • First Time Buyer Mortgages
    • Remortgages
    • Buy To Let Mortgages
    • Help To Buy Mortgages
    • Equity Release
    • New Build
    • Complex Income Mortgages
      • Mortgages for Medical Professionals
      • Newly Self Employed
      • Contractors
      • Portfolio & Landlord
  • Services
    • Protection
      • The value of Protection
      • Life Insurance
      • Critical Illness Insurance
      • Income Protection Insurance
    • Pension Planning
      • The value of retirement planning
      • What is a Personal Pension?
      • Pensions & Divorce
    • Investments
      • Asset-backed Investments
      • Deposit Based Investment
    • At Retirement
      • Your Retirement options
      • Income Drawdown
      • Enhanced Annuities
    • TAX
      • Inheritance Tax
      • Capital Gains Tax
      • Civil Partnerships
    • Business Protection
      • Key Person Insurance
      • Partnership Protection
      • Shareholder Protection
    • Home Insurance
      • Home and Contents Insurance
  • About
    • Our People
    • Testimonials
      • Past Testimonials
    • Locations
      • Financial Advice Surrey
      • Financial Advice Cranleigh
      • Financial Advice Woking
      • Financial Advice Guildford
      • Financial Advice Horsham
      • Financial Advice Dorking
      • Financial Advice Leatherhead
      • Financial Advice Godalming
      • Financial Advice Redhill
      • Financial Advice Crawley
    • Careers
  • Blog
  • FAQs
  • Portfolio
  • Contact

The new £1m Inheritance Tax allowance

020th June 201720th December 2018
By Oakwood Mortgage ServicesIn General

In the wake of the 2015 General Election, the Conservative Party confirmed it would deliver on its Manifesto promise that parents could pass their property up to the value of £1m to their children free of Inheritance Tax, thanks to a new ‘family home allowance’.

The allowance is called the Resident’s Nil Rate Band (RNRB) and takes effect in April 2017. By 2020/21 it effectively adds £175,000 to each parent’s nil-rate band (currently £325,000) in respect of their main residence, bringing the total that may be transferred IHT-free on the second death to £1m.

Basic rules

An estate will be entitled to the RNRB if:

  • the individual dies on or after 6 April 2017
  • they own a home, or a share of one, so that it is included in their estate for Inheritance Tax
  • their direct descendants, such as children or grandchildren, inherit the home or a share of it
  • the value of the estate is not more than £2m (estates valued at more than £2m the RNRB (and any transferred RNRB) will reduce by £1 for every £2 over the £2m taper threshold. This means that in the tax year 2020 to 2021, an individual would not be entitled to the RNRB if their estate is worth more than £2,350,000.)

An estate will also be entitled to the RNRB when an individual has downsized to a less valuable home or sold or given away their home after 7 July 2015, provided the deceased left the smaller residence or assets of equivalent value to direct descendants.

The RNRB allowance

The maximum amount of RNRB will increase every tax year as follows:

  • 2017/18 £100,000
  • 2018/19 £125,000
  • 2019/20 £150,000
  • 2020/21 £175,000

For later years, the amount of the RNRB will increase in line with the Consumer Prices Index. Any unused RNRB can be transferred to the deceased’s spouse / civil partner’s estate. This can also take place if the first of the couple died before 6 April 2017(even though the RNRB wasn’t available at that time).

The definition of direct descendant

For RNRB purposes, a direct descendant of a person is:

  • a child, grandchild or other lineal descendant of that person
  • a spouse or civil partner of a lineal descendant (including their widow, widower or surviving civil partner)
  • a child who is, or was at any time, that person’s step-child
  • an adopted child of that person
  • a child who was fostered at any time by that person
  • a child where that person is appointed as a guardian or special guardian for that child when they’re under 18

Example case studies

Mr A dies in the tax year 2020 to 2021 and leaves a home worth £300,000 and other assets worth £190,000 to his children.

  • The maximum available RNRB in tax year 2020 to 2021 is £175,000.
  • The RNRB that applies is £175,000 (the lower of the home value or £175,000)
  • The Inheritance Tax Nil Rate Band (NRB) is £325,000

Estate value £490,000

Less RNRB £175,000

Remaining estate value £315,000

Less NRB £315,000*

Value that IHT is due on £0

*£10,000 of NRB is unused and can be transferred to spouse.

Mrs B dies in the tax year 2020 to 2021 leaving a flat worth £100,000, and other assets of £400,000 to her son. She leaves the rest of her assets of £500,000 to her husband; these are exempt for IHT purposes.

  • The maximum available RNRB in tax year 2020 to 2021 is £175,000.
  • The RNRB that applies is £100,000 (as it is the lower of the home value or £175,000)
  • The Inheritance Tax Nil Rate Band (NRB) is £325,000

Estate value £500,000

Less RNRB £100,000*

Remaining estate value £400,000

Less NRB £325,000

Value that IHT is due on £75,000

*£75,000 of RNRB is unused and can be transferred to spouse.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Contains public sector information licensed under the open Government Licence V3.0.

If you would like to discuss the impact of Inheritance Tax on your financial planning please get in touch.

Simple ways to cut your spendingTime for an upgrade?

Share this post?

Facebook Twitter Pinterest

More posts

  • Popular
  • Latest
2018: the half year report
What life insurance is best for your joint mortgage?
Is your Help to Buy deal ending?
The cost of retirement
Happy 21st to the ISA
Business Protection. You need it more than ever!
Spreading the risk
Mortgage Payment Update November 2020

Stamp Duty Calculator


Your calculation


Stamp Duty Due:
Band
Rate
Amount
Total
Up to


Please note: This calculator is provided as a guide only on how much stamp duty land tax you will need to pay in England and Northern Ireland. It assumes that the property is freehold and for residential purposes.

Blog Archives

Services

  • Mortgages
  • Protection
  • Pensions
  • Investments

Recent Posts

  • Happy 21st to the ISA 7th January 2021
  • Business Protection. You need it more than ever! 16th December 2020
  • Spreading the risk 10th December 2020

Open Hours

  • Monday9:00 - 17:00
  • Tuesday9:00 - 17:00
  • Wednesday9:00 - 17:00
  • Thursday9:00 - 17:00
  • Friday9:00 - 17:00

Socials

  • Facebook

  • Twitter

Google Rating
5.0
Oakwood Mortgage Services Ltd
Oakwood Mortgage Services Ltd
5.0
Sharon Price
Sharon Price
15:30 12 Aug 20
In these current times Stuart has assisted me with a temporary solution to my mortgage issues which went very smoothly. I will be working with Stuart again very soon to change mortgage product completely. Thank you Oak wood Mortgage Services
Ben Brown
Ben Brown
16:38 31 Jul 20
I would like to say a huge thank you to Oakwood Mortgage Services and in particular to Richard Burley who seems capable of working miracles, particularly when dealing with the complicated applications of a sportsman. Richard’s calm manner and problem solving have been brilliant over the years and allowed both Katie and I to stay relaxed and in control during stressful house buying moments, as well as helping us to navigate the the complex buy-to-let market! We owe a huge debt of gratitude to Richard and Oakwood mortgage services ahead of moving house next week, and I would highly recommend their services. In particular I would recommend them to other sports people who have previously struggled with mortgage companies based on our short contracts and the potentially volatile nature of our work. Thanks again Richard. Ben and Katie
Gwenie Ralph
Gwenie Ralph
20:57 06 Jul 20
I gave Stuart at Oakwood Mortgage services a challenge of finding me an impossible mortgage. I knew I wouldn't get exactly what I wanted, but he came up with some nice surprises. He explained everything, not pushy at all, a friendly and professional approach. Thank you
nicky Myers
nicky Myers
19:17 25 May 20
We were first time buyers and dealt with Richard around the mortgage application. He helped us understand each process, explaining everything thoroughly and came to meet us twice where he was very personal and efficient. Dave took us through the building and contents and life insurance process, again coming to meet us in person and took us through the options, step by step. Dave was very communicative and answered any questions we had.Emma was there throughout this process and on hand with any urgent queries we had and was a delight to deal with.They managed to make it all happen, even during lockdown!Highly recommend Richard, Dave, Emma and Oakwood. We are very happy in our new home!
Daniella Castro Gouveia
Daniella Castro Gouveia
11:31 19 May 20
I have worked with a number of the Oakwood team over many years and they are all excellent and totally professional at what they do. Dave came to our family home a few years ago to discuss and advise us in terms of financial insurance. He was very knowledgeable, really easy to talk to. Sometimes discussing financial things can be quite tricky to understand, but I felt at complete ease with Dave. I would highly recommend speaking to him if you need insurance or even need a mortgage as he covers both areas. Thanks for all your support Dave. It's always good to have someone who has your back!
Richard Craven
Richard Craven
19:12 03 May 19
Stuart was excellent, helped me obtain a mortgage quickly and painlessly with minimal effort and was always ready to promptly answer any questions I had.
Andrew South
Andrew South
17:50 26 Mar 19
Stuart was very profession and friendly, He was there to help when something went wrong.Highly recommend!!
Ian L
Ian L
13:45 03 Jan 19
When we started looking for a house, we contacted Stuart based on a work colleague's recommendation. Having not bought a house in the UK before, we had a lot of questions.Stuart guided us through the process and was always available to answers questions and provide advice that was easy to understand.We had a protracted period between initial contact and purchase, in this time Stuart was patient, professional and provided us with a high level of confidence that we were in capable hands.A huge thank you to Stuart and the staff at Oakwood, we would not hesitate to recommend them.Ian and Yoosun
Claire Vince
Claire Vince
22:13 21 Dec 18
Great service. Paul talked us through everything really clearly and made the whole process very smooth and straightforward. We have recommended Oakwood to friends as a result.
Christopher Relph
Christopher Relph
23:27 29 Aug 18
The team is very friendly, professional and knowledgeable on their given subject. My situation was rather unusual and my options were very limited, if i had tried on my own i wouldn't have found the best deal for me. The information provided to me was well presented and insightful, if anything was unclear they made sure that i understood things fully. In the end they found the best deal out there that ticked all the boxes i needed and went above and beyond. To make sure i wasn't put into a position i couldn't afford to be in Stuart would go to an agent and tell them when things weren't possible, even when they were insistent on getting a deal, Stuart had my back in it!I can't recommend them enough, and will be returning to them down the line myself!
Sam Eccles
Sam Eccles
15:35 24 Jul 18
Top notch service. Friendly, prompt and accessible no matter where you are based (I'm in the Highlands). Much better service than that experienced by local face-to-face advisers with a large portfolio of companies that ensure you can get the mortgage to suit your needs. Have happily referred to others in less than usual circumstances, all of whom have come away delighted
Michelle Ames
Michelle Ames
18:20 07 Jul 18
Highly recommend. We were first time buyers and Stuart made the process simple and efficient. We found our property and made an offer on the spot, but the agents needed to speak to Stuart before stopping further viewings, so he dropped everything whilst at a conference and the rest is history. Buying a house is an emotional time, so having the mortgage element handled by a professional, yet down to earth person like Stuart was invaluable to us. Thanks Stuart.
Next Reviews
powered by Google
Terms of use | Privacy Policy
The information on this website is for use of the residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it. | Oakwood Mortgage Services © 2019 | All Rights Reserved
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.OkPrivacy Policy