Inheritance Tax limit

wookie6

Hi,

Can someone confirm if my understanding is correct... If a remaining parent dies, the IHT limit is currently £500,000 until 25/26 tax year based on the standard £325,000 IHT limit + Residence Nil-Rate Band of £175,000 which can be used on used on one home the person lived in within the UK?

I assume the RNRB can still be used even if the person owned more than one home? 

Have there been any indications of what may happen to the RNRB after the 25/26 tax year?

Thanks.

Keep_pedalling

If the parent inherited the entire estate of their spouse then they could have an exemption of £1M as their estate could claim the transferable NRB and transferable RNRB. To get the full RNRBs the main residence would need to worth £350k or more or they downsized from a main residence of that value. 

Albermarle

Have there been any indications of what may happen to the RNRB after the 25/26 tax year?

There are  campaigns in the Daily Mail and Daily Express to get rid of the 'hated death tax' as they call it, and there is speculation that Sunak & Hunt are thinking about doing that. However as it brings in increasing Billions, that seems unlikely.

There has been other comments that the IHT rules are too complicated ( we see on this forum that they are widely misunderstood) and the RNRB has been mentioned as one of those issues. So some kind of reform of IHT rules is possible, dressed up as a concession, but for now only speculation.

wookie6

Thanks for the replies, really helpful. So even ignoring the RNRB (as its unclear what will happen to this post 25/26 tax year), if the remaining parent inherited the entire estate of their spouse then the standard IHT would be £650,000 (personal NRB + transferable NRB).

Albermarle

wookie6 said:

Thanks for the replies, really helpful. So even ignoring the RNRB (as its unclear what will happen to this post 25/26 tax year), if the remaining parent inherited the entire estate of their spouse then the standard IHT would be £650,000 (personal NRB + transferable NRB).

Yes.

Probably more likely the RNRB will be abolished and the £325K NRB increased, to simplify things. Just guessing though.