The “Million Pound Nil-Rate Band”

25th September 2015 10:04 am Comments Off on The “Million Pound Nil-Rate Band”

I’ve read about the Million Pound Nil-Rate Band and I want one. 

How do I get it?

You don’t, at least not yet, and maybe not at all.

The first thing you need to know about the Million Pound Nil-Rate Band is that there isn’t one.  Nothing has changed and nothing will change until 2017.

Then there will be a build-up over four years to what will amount to a Million Pound Nil-Rate Band for some people, in limited circumstances, in 2020.

So can I have one then?

If you’re lucky.

How lucky?

Quite a number of people may get something extra from the new rules, but your estate will get a Million Pound Nil-Rate Band only if

  • you die on or after 6th April 2020, and
  • you are the last survivor of a married couple (or civil partnership), and
  • your spouse left everything to you or to charities, and
  • neither of the two estates comes to more than £2m net, and
  • neither of you made any significant gifts in your last seven years, and
  • your estate includes a residence (as defined) or assets representing the proceeds of its sale (as defined), and
  • that residence is, or proceeds are, inherited (as defined) by direct descendants (as defined), and
  • that residence is, or proceeds are, worth at least £350,000 net, and
  • there are other assets (including any value over £350,000 in the residence or its proceeds) of at least £650,000 left to beneficiaries other than charities.

OK, I get it, but I thought you said 2017?

I also said ‘build up”.   If you die on or after 6th April 2017, the possible maximum is

  • £850,000 if you die after 5th April 2017
  • £900,000, after 5th April 2018,
  • £950,000, after 5th April 2019, and
  • £1,000,000, after 5th April 2020.

Anyway, it’s not impossible, so what can I do to shorten the odds?

We don’t know yet.

The first of the new laws to bring this in are going through Parliament at the moment, and may be changed during the process.

Crucial parts of the legislation won’t even be drawn up until 2016, and won’t become law until the end of that year.

So I just do nothing?

I didn’t say that.

You may have to change your Will to make sure you are getting as much as possible out of the new rules, particularly if your Will makes a gift to a discretionary trust, but there is nothing to be done now.

The sensible thing is to make sure that we review your Will (and any trusts connected with it) in the early part of 2017, once the detail of the legislation is known, and before the rules change on 6th April that year.

What if, you know, I die before that?

Remember, one of you has to make it to 6th April 2017 to get any extra nil-rate band.

There could be a problem if one of you dies before then and the Will says what later turns out to be the wrong thing, but we can fix that with a deed of variation, which allows us effectively to alter a Will retrospectively, within two years after a death.

Categorised in: Latest news, Wills, Probate and Trusts

This post was written by Colemans Solicitors LLP

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