Records on property values could be kept for a generation
New UK taxation rules concerning allowances on the value of property to be passed on to descendants could mean that records need to be kept over the span of a generation.
The revised residence nil-rate band that affects the calculation of the level of inheritance tax relief available to families is expected to mean records will need to be kept for far longer periods than ever before.
The revised residence nil-rate band comes into force from 6 April 2017 and will see significant increase in allowances available, in addition to the current inheritance tax-free threshold of £325,000.
After a staggered start over a few years, the tax break will rise in line with CPI inflation.
Julia Rosenbloom, director in private client tax services at accountancy Smith and Williamson, commented: “As these rules are being introduced to benefit descendants it is important to retain very detailed records of financial activity, particularly if more than one property transfer is completed, throughout your life."
“This should allow your descendants to easily claim the revised residence nil-rate band allowance, a tax-free sum. However, the concern is that many may not retain detailed records of a property sale that occurred a number of years ago,” she added.
The main residence nil-rate band means that a wider scope of taxation planning opportunities will be available to householders, but these bring with them greater levels of complexity for those wishing to take advantage.
The new system will mean more work for accountancy sector professionals, as head of communications at Chase de Vere Patrick Connolly explained: “For many people this is yet another reason why they should use an independent financial adviser. For those who don’t, they’ll need to ensure they fully understand the rules and that they maintain appropriate records.”