Residence Nil Rate Band (RNRB).
A new tax-free allowance was announced in the Summer Budget 2015 (the Residence Nil Rate Band) that will take effect on or after 6th April 2017. Downsizing provisions have yet to be finalised.
There are a lot of myths and misconceptions surrounding this new allowance - please call or view our website pages (not yet updated) for further information - including:
You may not get the full allowance (or double the allowance) if:
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This is an agreement that can be put in place by the joint owners of a business in conjunction with life insurance policies that are taken out for each business partner. The policies will reflect the value of the business relating to each partner as agreed by all parties and re-valued as specified in the agreement (e.g. after submission of year end accounts.)
There is an “option” involved for both parties to the agreement. If the surviving business partners want to purchase the deceased partner’s holding in the business (his or her “shares”) then the beneficiaries of the deceased partner’s estate must sell. Conversely if the beneficiaries want to sell the shares, the business partners must buy.
It is important to note that this is a non-binding agreement which means that when the estate is assessed for Inheritance Tax (IHT), the shares are still eligible for relief from IHT.
We recommend that the agreement is drawn up in conjunction with Business Wills for all the business partners and you so that trusts can be incorporated to utilise all tax allowances that are available and to fully maximise your IHT savings.
This means that:
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