Blog — Clearwater Wealth Management

It is with some sadness that I am writing to confirm that the old Sage, Roger Moore, has decided to retire at the end of April; his last working day will be Thursday 27th.

Roger joined the firm on 1st October 1998, approximately 18 ½ years ago and in that time, he has worked tirelessly to help us provide the best possible service to our clients. From a personal perspective, he has been (and I hope will always remain) a loyal and trusted friend; I will always be grateful for his unwavering support through the good times and the bad. I am sure you will want to join me in wishing him a long and very happy retirement.

Roger will be difficult to replace but you will be pleased to know that over the past few weeks he has been working with his successor, Adam Gannon, to ensure that the transfer of duties and responsibilities will be as seamless as possible. Some of you may have already spoken to Adam, he is a very capable and personable fellow and we are very excited that he has decided to become part of the team.

Adam joins us from Reassure, a Life and Pensions company, where he was a Team Leader responsible for administering Annuities and Income Drawdown Schemes. At age 36, Adam is somewhat younger than his predecessor (and me, for that matter). I hope that his relative youth will inject some new life into the old firm.

Outside of work, Adam’s interests include socialising with friends and family, watching sport, travelling and listening to rock music.

You will doubtless be speaking with Adam at some point over the course of the next few months and I know he is looking forward to getting to know you all.

Just in case you were wondering, the lovely Denise isn’t going anywhere, well not for a while anyway!

If you have any concerns or questions about any finance related matter, please do not hesitate to call me at any time.

With best wishes,

Yours sincerely

Graham Ponting CFP Chartered MCSI
Managing Partner

The Residential Nil Rate Band (RNRB) for inheritance tax (IHT) was first announced in 2015 and will be available from 6 April 2017. Initially set at £100,000, it will increase by £25,000 each year until it reaches £175,000 in April 2020.

The standard nil rate band (currently £325,000 each) is frozen until April 2021, after which both bands will increase in line with CPI. This means that in the 2020/21 tax year, each individual will be able to pass on up to £500,000 and a married couple or civil partners, up to £1m. Will everyone be able to benefit this?

The RNRB is only available on death so cannot be used for lifetime gifting, and as you would expect, comes with conditions. So, let us consider some of the key points around the RNRB, when it is available and when it may not be available.

Qualifying residential interest

The RNRB is only available to those who held a ‘qualifying residential interest’ immediately before death. They must have owned all or part of the property at the time of death and this property must have been their residence but not necessarily their main residence. Therefore, ownership of an investment property is not a qualifying interest.

Those who have released equity will be affected, as it is the net value of the home that will be used; any outstanding loan against the property will have to be deducted first.

Any individuals who do not own their home will be unable to utilise the RNRB as they will not have a qualifying residential interest, however, there are provisions for those that have sold a property. For example, if the deceased owned a property after 7 July 2015 which is subsequently sold or downsized because they are moving into residential care.

Lineal Descendants

The property, or cash if the deceased downsized, needs to be ‘closely inherited’; passing to lineal descendants such as children or grandchildren, including adopted children, step-children, fostered children and those under guardianship. A spouse, surviving spouse or surviving civil partner of a lineal descendant, who has not remarried by the time of the property owner’s death, is also included.

If there are no lineal descendants then the RNRB will not be available.

Transferring unused allowance

Similar to the standard inheritance tax IHT nil rate band, any unused RNRB can be transferred between spouses and civil partners and must be claimed within two years from the end of the month in which the second death occurs.

Where the first death occurs before April 2017, an unused RNRB of 100% will be deemed to be available when the surviving spouse or civil partner subsequently dies, regardless of whether or not the first to die owned a qualifying residential interest or not.

Large estates

There is also a ‘taper threshold’ for large estates, which is initially set at £2m, reducing the RNRB by £1 for every £2 over the threshold. So, when the RNRB is introduced at its initial level of £100,000, an estate of £2.2m or higher will mean there will be no RNRB available. This rises to £2.35m for the 2020/21 tax year when the RNRB is £175,000. This doesn’t account for any transferrable RNRB which the deceased’s estate may be entitled to.

When valuing the estate, it is the net value of the assets held on death, it does not include lifetime gifts previously made by the deceased or make allowance for any reliefs such as business property relief and agricultural property relief that may be available.

If you have any concerns or questions about the above or indeed any other finance related matter, please do not hesitate to call me at any time.