New inheritance tax changes were introduced in the second budget in 2015.
The inheritance tax nil-rate band was previously frozen at £325,000 until April 2018. It will now remain frozen until April 2021.
The Government will introduce an additional nil-rate band when a residence is passed on death to a direct descendant. This will be £100,000 in 2017/18 and will increase by £25,000 each year until it is £175,000 in 2020/21. This will affect individuals, with direct descendants, who have an estate (including a main residence) with total assets above the IHT threshold (or nil-rate band) of £325,000.
From April 2017, the point at which an individual who is classed as a non-domicile is deemed to be domiciled for inheritance tax purposes will be brought forward to 15 out of 20 years. The Government will also treat individuals who were born in the UK to parents who are domiciled here, as UK domiciled whilst they are in the UK. This aligns IHT with the changes to the income tax and CGT regimes.
The Government will legislate to ensure that from April 2017, inheritance tax is payable on all UK residential property owned by non-domiciles including property held indirectly through an offshore structure. This will apply regardless of their residence status for tax purposes and so will also include non-domiciles who are not UK resident. A full consultation will take place later in the year.