With substantial changes planned in the rates paid for income and capital gains tax, it is unsurprising there were no major new announcements for inheritance tax purposes. Instead the Government re-confirmed its commitment to the new main residence nil rate band (MR-NRB) and its downsizing proposals. The MR-NRB was introduced in the summer 2015 Budget and provides IHT relief on death (up to a value of £175,000) where a parent leaves his property to a child. The Government confirmed it will legislate to ensure the MR-NRB will be available to those who downsize to a smaller property after 8 July 2015. In addition, it also announced new proposals for:
- estate duty and charges relating specifically to objects granted exemption from estate duty. Where these are sold, HMRC can choose whether to raise an IHT or estate duty charge. The proposed charge will bring the position for deaths in line with the tax position for lifetime sales; and
- the Government will legislate (as announced in the 2015 Autumn Statement) to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown, but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011.