A new IHT relief is to be phased in from April 2017 starting at £100,000 and increasing in stages to £175,000 by 2020/21. There are however conditions attaching to the allowance which mean that it will not be available to everyone.
The intention of the new relief is to make it easier to pass the family home to direct descendants. Individuals who do not own property cannot benefit and nor can those without children defined under the statute . Additionally, estates worth over £2 million are subject to a taper relief which reduces and might potentially eliminate the benefit.
The relief is only available on death, and can only be claimed on the value of a property which has been occupied as a residence by the deceased at some time although it does not need to be their main home. There are separate considerations where someone has downsized or given away their property since 8 July 2015.
The recipient of the gift must fall within a specified list of descendants although this is widely defined and would include step children and foster children.
If a gift is by will to a beneficiary through a trust, care will be needed as not all trusts will qualify.
Gifts to grandchildren dependent upon them attaining a specified age would fall foul of the requirements.
