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Reminder: residence nil-rate band from April

The residence nil-rate band, also referred to as the ‘family home allowance’, will come into effect from 6 April 2017.

The allowance is an addition to the £325,000 nil-rate band for inheritance tax and will apply to those passing on a home to a direct descendent.

The band begins at £100,000 for 2017/18 and will increase by £25,000 each tax year until it reaches £175,000 in 2020/21.

Tax year Residence nil-rate band Individuals: maximum nil-rate band Married couples and civil partners: maximum nil-rate band
2017/18 £100,000 £425,000 £850,000
2018/19 £125,000 £450,000 £900,000
2019/20 £150,000 £475,000 £950,000
2020/21 £175,000 £500,000

£1,000,000

Married couples or those in a civil partnership can pass on any used allowance to their spouse or partner.

The band will only apply if you pass on a property to a direct descendent such as a child, grandchild or other lineal descendent.

The band is also limited to just a single property so if you own one residential property and have also lived in it, it can be eligible for the allowance.

Contact us today to discuss the residence nil-rate band.