Inheritance Tax - Transferable Nil Rate Band

New legislation has been introduced allowing for a person's unused nil rate band allowance for inheritance tax to be transferred to his/her surviving spouse.

The Transferable Nil Rate Band is great news for many people.  It will save inheritance tax for a widow(er) who dies after 9th October 2007, and where their spouse died without making full use of their nil rate band allowance.

The new rules only benefit married couples and civil partners.  There is no benefit for those who are single or divorced, or for unmarried couples or co-habitees (including siblings).

A formal claim to take advantage of this provision must be made after the second spouse has died, and evidence must be produced to HM Revenue & Customs that all or part of the nil rate band from the first death is still available.

Steps to be taken:

1.  Review your existing will.  Even where a tax planning will may no longer be required, some form of trust arrangement may still be appropriate.

2.  If you (or one of your parents/relatives) have been widowed and you will want to rely on the new provisions, you should collect together the information that will be needed to make a claim to transfer the first nil rate band.  This will include copies of the first spouse's death certificate, will, grant of probate and marriage certificate.

If you would like a copy of our guidance note on this topic, or further advice about how the new provisions affect you and how best to take advantage of  them, please contact us.