Are there any benefits for Inheritance Tax purposes of leaving our house to our grandchildren rather than to our children?

This is an interesting question and was raised by the Housing Minister at the most recent Conservative Party Conference. By gifting a property or other assets including cash to your grandchildren it may assist them getting onto the housing ladder and may have an effect on the overall Inheritance Tax liability. If you’re looking at leaving assets behind, it may be wise to contact your Bolton Accountants to discuss the best possible outcome for everybody involved.

As life expectancy increases with grandparents living longer, more people are skipping a generation and passing assets to their grandchildren by way of gift or into family trusts. This can be a contentious area within families where grandparents choose to miss out their own children in the transfer of their wealth.

Where grandparents leave their home or other assets to their grandchildren, they are in effect skipping a generation and hence the Inheritance Tax charge is skipping a generation. At present each person has a Nil Rate Band of £325,000. This can be transferred to the surviving spouse if not used on the first death.

From April, 2017, a new Residential Nil Rate Band is being introduced. By 2021, there will be an additional £175,000 per person available to pass such assets tax-free and a couple can then pass £1m tax-free subject to the relevant conditions being met.

When considering leaving assets to grandchildren who may not have reached the age of 18, you might consider leaving such assets in the form of a trust. Appropriate legal and tax advice must be sought when considering leaving assets or money to grandchildren.

If you’d like more advice on Inheritance Tax contact our Bolton Accountants on 01204 534 031 or contact us via our enquiry form.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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