Malcolm Finney looks at how these two important allowances can be utilised together on death.
The tax year 2020/21 will be the first when the so-called £1 million inheritance tax (IHT) free estate is possible, as promised by the Conservatives back in early 2015.
£1 million: IHT-free
A new tax-free band was introduced (in IHTA 1984, s 8D); the residence nil rate band (RNRB). Initially, in the tax year 2017/18 its value was £100,000, but it has increased by £25,000 for each subsequent tax year, to a maximum of £175,000 in the tax year 2020/21 (IHTA 1984, s 8D(5)).
When combined with the nil rate band (NRB) of £325,000 a total tax-free amount of £500,000 is available, producing a total tax-free amount of £1 million for a married couple.
However, things are not
