Mine’s a double

The recent proposal to introduce a transferable inheritance tax nil rate band for married couples and civil partners led many to believe the nil rate band had been doubled from £300,000 to £600,000. Unfortunately this was not the case and initial excitement at the announcement was short-lived for many couples. That is because it only offers what most well-advised couples with properly drafted wills would benefit from anyway, namely full use of both nil rate bands.

Will the new rules mean couples no longer need a nil rate band legacy in their will? Cue the lawyer’s answer: “…it all depends”. For many couples that may be true. However, where either of them has been previously widowed, or if there are second marriages and step-children involved, the position is less clear-cut. Similarly where existing wills include a nil rate band legacy, particularly if it is not a flexible discretionary trust, it may be better to remove it by changing the will.

One thing is certain. The new rules offer an unexpected inheritance tax windfall for most existing widows and widowers. On their own death they may be able to benefit from their late partner’s unused nil rate band irrespective of when their partner died. For those people their nil rate band really will have doubled.

For further information on how the proposed transferable nil rate band may affect you, or for advice on whether your will needs changing, please contact:

Victoria Turner
Tel +44 (0)20 7440 7430
victoria.turner@mishcon.com