insideKENT Magazine Issue 41 - August 2015

Inheritance tax and the family home What it means for you Following George Osborne’s ďƵĚŐĞƚŽŶϴ:ƵůǇ͕ĚƌĂŵĂƟĐ ĐŚĂŶŐĞƐŚĂǀĞďĞĞŶĂŶŶŽƵŶĐĞĚƚŽ ƚŚĞŝŶŚĞƌŝƚĂŶĐĞƚĂǆƚƌĞĂƚŵĞŶƚŽĨ ƚŚĞĨĂŵŝůǇŚŽŵĞ͘dŚĞƐĞĐŚĂŶŐĞƐ ŝŵƉůĞŵĞŶƚĂŵĂŶŝĨĞƐƚŽƉůĞĚŐĞ ŵĂĚĞďǇƚŚĞŽŶƐĞƌǀĂƟǀĞƉĂƌƚǇ ƉƌŝŽƌƚŽƚŚĞůĂƐƚĞůĞĐƟŽŶ͘ dŚĞĮƌƐƚƉŽŝŶƚƚŽŶŽƚĞŝƐƚŚĂƚƚŚĞ current inheritance tax threshold of άϯϮϱ͕ϬϬϬǁŝůůďĞĨƌŽǌĞŶƵŶƟůƉƌŝů ϮϬϮϭ͕ŵĞĂŶŝŶŐƚŚĂƚŝƚǁŝůůŚĂǀĞ ƌĞŵĂŝŶĞĚƵŶĐŚĂŶŐĞĚĨŽƌϭϮǇĞĂƌƐ͘ dŚĞŽŶƐĞƌǀĂƟǀĞƐŚĂǀĞŚŽǁĞǀĞƌ introduced the concept of an ĂĚĚŝƟŽŶĂůŝŶŚĞƌŝƚĂŶĐĞƚĂǆŶŝůͲƌĂƚĞ band (“NRB”) which can be claimed when a family home is passed on death to a “direct descendant” – namely a child, step-child, adopted or foster child and/or their own ŽīƐƉƌŝŶŐ͘dŚŝƐĂĚĚŝƟŽŶĂůEZǁŝůů be phased in over four years, with άϭϬϬ͕ϬϬϬĂǀĂŝůĂďůĞĨƌŽŵƉƌŝůϮϬϭϳ͕ ŝŶĐƌĞĂƐŝŶŐƚŽάϭϳϱ͕ϬϬϬďǇƉƌŝů ϮϬϮϬ͘dŚĞƌĞĂŌĞƌŝƚǁŝůůŝŶĐƌĞĂƐĞ in line with the Consumer Prices Index. Many clients have been concerned that the sale of their property or a move to a smaller home would result in the loss of ƚŚŝƐĂĚĚŝƟŽŶĂůďĞŶĞĮƚ͘dŚŝƐĚŽĞƐ not appear to be the case, although exactly how the Government will ĞŶƐƵƌĞƚŚĂƚƉĞŽƉůĞŝŶƚŚŝƐƐŝƚƵĂƟŽŶ ĐŽŶƟŶƵĞƚŽďĞŶĞĮƚĨƌŽŵƚŚĞŶĞǁ rules will only be known in September, following the ƉƵďůŝĐĂƟŽŶŽĨĂĐŽŶƐƵůƚĂƟŽŶŽŶ this subject. All we know now is ƚŚĂƚŝƐƚŚĂƚƚŚĞĂůůŽǁĂŶĐĞǁŝůůƐƟůů be available if a person downsizes or ceases to own a home on or ĂŌĞƌϴ:ƵůǇϮϬϭϱƉƌŽǀŝĚĞĚĂƐƐĞƚƐŽĨ an equivalent value are passed on death to direct descendants. This allowance will not be available immediately. It only ĂƉƉůŝĞƐƚŽĚĞĂƚŚƐŽŶŽƌĂŌĞƌϲ ƉƌŝůϮϬϭϳ͕ĂŶĚǁŝůůŽŶůǇďĞĨƵůůǇ ŝŵƉůĞŵĞŶƚĞĚďǇϲƉƌŝůϮϬϮϬ͘dŚĞ Government will therefore have ĨƵůĮůůĞĚƚŚĞĞůĞĐƟŽŶƉůĞĚŐĞƚŽ ďƌŝŶŐŝŶƚŚŝƐĂĚĚŝƟŽŶĂůďĞŶĞĮƚ ĚƵƌŝŶŐƚŚĞůŝĨĞƟŵĞŽĨƚŚŝƐ Parliament, but clearly at the ůŽǁĞƐƚƌĞĂůŝƐƟĐĐŽƐƚƚŽƚŚĞ Exchequer. dŚĞƌĞŝƐĂŶŽƚŚĞƌƐƟŶŐŝŶƚŚ

insideKENT Magazine Issue 41 - August 2015 | Page 164