As widely anticipated, in his summer 2015 Budget, the Chancellor announced measures that will eventually allow couples to pass on their family home to their children or grandchildren free of inheritance tax, as long as the home is not worth more than £1 million. However, the relief, taking the form of a main residence nil rate band in addition to the general nil rate band, is being phased in progressively and the £1 million limit will not be reached until 2020/21.
Additional nil rate band
For deaths that occur on or after 17 April 2017 and additional nil rate band, the main residence nil rate band will be available when a residence is passed on to a direct descendant. The main residence nil rate band is set at:
- £100,000 for 2017/18;
- £125,000 for 2018/19;
- £150,000 for 2019/20; and
- £175,000 for 2020/21.