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Nil by inheritance

The government's new main residence allowance is not the catch-all solution to inheritance tax, warns Kate Johnson

11 August 2015

July’s Summer Budget was the first all Conservative Budget in 19 years, and it brought some surprises and some long-awaited announcements. One such announcement was a change to the inheritance tax nil rate band (NRB).

Although there were plans for the NRB to be increased to £350,000 by 2010, these plans were set aside during the recession and the band has been fixed at £325,000 since 2009. Before then it had been increased most years, and three years was the longest there had ever been without an increase. This, together with inflation, particularly in the housing market, has been pushing more and more estates over the NRB and into the realms of inheritance tax charged at 40 per cent.

The transferable NRB, introduced in 2007, allows spouses to pass any unused part of each of their bands between themselves. Previously it was lost if it was not used. As most spouses leave their estates to each other on the first death, and transfers between spouses ar...

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