Downsizing does not have to lose you the £175,000 residence nil-rate band. If you sold, gifted or moved to a less valuable home on or after 8 July 2015, the estate can claim a downsizing addition to replace the allowance lost on the move.
- The former home must have qualified for the residence nil-rate band had it been kept.
- Direct descendants must inherit some of the estate — not necessarily a property.
- Only one disposal can be taken into account, even after several moves.
- The personal representatives must claim it, within two years of the end of the month of death.
- The £2m taper still applies to larger estates.
The practical step is small: keep the completion statement and the date of the sale, and make sure your executors know the claim exists. It is the relief most often missed.
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Six short reads each week on tax, Wills, family wealth and running a business, from John Ireland. Since 1996, three decades of protecting families.