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Home > News > The year of the £1 million inheritance tax allowances

The year of the £1 million inheritance tax allowances

15 April 2020 | Clare Hopkins

From the 6th April 2020, the residence nil rate band has been increased by £25,000 to £175,000. Clare Hopkins, Director and Head of Wills & Inheritance, explains what this means for families.

Inheritance tax and the Nil Rate Band

Inheritance tax is usually payable on death where the value of the persons’ estate is over £325,000 (this is referred to as the ‘Nil Rate Band’). Tax is payable on any excess above the Nil Rate Band at a rate of 40%.

The Residence Nil Rate Band

From the 6th April 2020, if a person leaves a property to their children or grandchildren, then the Residence Nil Rate Band is also available. This will provide an additional £175,000 of inheritance tax free allowance per person. The Residence Nil Rate Band is available where the estate contains a family home left to children, including step-children, adopted and fostered children. It also includes other ‘direct descendants’ including grandchildren and great grandchildren.

The increase in the Residence Nil Rate Band means that a person can leave more to their families tax-free. For example, an individual can now leave £500,000 tax free or a married couple can leave £1million, provided that the estate includes an interest in a property which fulfills the requirements outlined above.

Inheritance Tax is not charged on assets given to your spouse or civil partner (“the spouse exemption”).

For estates with a net value of £2million or more, the Residence Nil Rate Band will taper away £1 for every £2 over £2million. Therefore currently, the Residence Nil Rate Band will not be available for an individual estate over £2.2million. There may be cases where lifetime gifting is appropriate to ensure the estate is within the limits.

Tax planning

The Nil Rate Band and Residence Nil Rate Band reliefs offer great scope for tax-planning and we can advise you how these and other inheritance tax reliefs can be used to ensure that you do not pay more tax than you need to.

Specialist inheritance tax solicitors

Inheritance tax can be complicated and confusing. A specialist tax solicitor can help you plan your estate and make the best use of available tax reliefs, giving you peace of mind that your family will inherit with the minimum amount of payable inheritance tax.

Our team of inheritance tax experts are on hand to discuss your situation and provide you with practical advice. We offer a personal, bespoke service tailored to your individual needs.

For an initial discussion or to arrange an appointment with an inheritance tax specialist in Bristol or London, please call 0117 906 9400 or email

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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