Inheritance Tax – Residence Nil Rate Band

A new Inheritance Tax allowance comes into force on 6th April 2017. This will apply to property left to direct descendants. The Residence Nil Rate Band, as the new relief is called, means that from this year, a new tax free allowance will apply to a property left by a deceased person to a descendent. If there is more than one property in the estate, the executor can decide which property is to be allocated for this purpose.

This allowance starts at £100,000 and will rise in £25,000 blocks over the next 4 years until, in the tax year 2020/21, it will stand at £175,000. If the property is held in joint names of a married couple or civil partners, each of the parties enjoys this relief - and it’s transferrable from one to the other on death if it’s not been used up.

Here are the basic rules. The Residence Nil Rate Band will apply if the:

  • individual dies on or after 6 April 2017
  • individual owns a home, or a share of one, so that it’s included in their estate
  • individual’s direct descendants such as children or grandchildren inherit the home, or a share of it, and
  • The value of the estate isn’t more than £2 million

Direct descendants include, the children, grandchildren and further lineal descendants of the deceased. They also include the spouse or civil partner of a direct descendant. Also included are step children, adopted children, fostered children and children of whom the deceased was guardian.  You can find an outline of what are considered to be descendants on the HMRC website. You can click here to view this information.

Direct descendants don’t include nephews, nieces, siblings and other relatives who aren’t included in the list above.

The Residence Nil Rate Band is in addition to the current Inheritance Tax (Nil Rate Band) threshold of £325,000. This is also transferrable between spouses or civil partners if it is not exhausted on death.

The total Inheritance Tax allowances available to married couples and civil partners from the tax year 2020/21, will be £1 million – and after that the allowances will increase in line with inflation (as measured by the Consumer Price Index).

There are a number of helpful case studies on the HMRC website ranging from the most simple and straight forward to the very complicated. You can view those case studies by clicking here.

Interestingly, if one spouse or civil partner dies before April 2017(whether or not they owned a share of the property or had already passed a share to children), the survivor will be able to use both of their family home allowances when he or she dies.

If you have a Will, you need to make sure it’s up to date so that you can take advantage of this tax-free allowance. If you don’t have a Will, you need to make one now to ensure you can decide who will benefit from this allowance.

Inheritance Tax planning is a complex process and we recommend this be undertaken by an expert in this field.

Get In Touch

Contact us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).


A great year for our Estate Agency and the local property market!

While there have been challenges for both buyers and sellers this year, the property market in Renfrewshire has experienced considerable improvements and we are delighted to announce that our Estate Agency has secured over £20 million worth of property sales on behalf of our clients, in 2016.

The volume of residential sales in Renfrewshire increased in 2016. The latest Registers of Scotland house price report shows a 19% increase in quarter 2 sales this financial year in the local area, compared to quarter 2 last year. For the same period, the average property value in Renfrewshire increased by 3%. Clearly despite uncertainty surrounding Brexit and more recently the US presidential election, the local market has shown resilience.

In 2016, we have not only seen more buyers in the local market, but also more sales being agreed and in shorter periods of times, with Walker Laird selling over 100 properties in Renfrew alone. This year has also brought more favourable conditions for sellers, with growing demand and a steady supply of new properties. In 2016 we witnessed the frequent return of closing dates – an impressive 44 times at Walker Laird this year.

Competition amongst buyers has been particularly obvious when marketing family houses, as we found that some buyers were prepared to pay a premium price for the right property. One property for example, went to a closing date with 12 offers in place, the highest of which was 28% above asking price.

The demand for good family size accommodation looks set to continue, so if you want to know how much your home is worth in today’s market or get advice about moving in 2017, we would be delighted to provide you with an up to date and free valuation. Buyers trying to identify their ideal home should also get in touch and speak to us about using our matching service.

We can offer competitive fee structures for sellers coming to the market early in the new year, which is the ideal time to take advantage of that early rush and pick up of activity after Christmas. We can also offer a full deferral of the up-front costs.

Get In Touch

Call 886 5678 and speak to one of our experienced team.