John Cairns is a tax partner at French Duncan Chartered Accountants

Death and taxes are the two certainties in life. Having said that, not all estates at death are subject to Inheritance Tax and the budget on 8 July 2015 will enable some to escape its clutches by introducing an additional nil rate band Inheritance Tax threshold, where you own a valuable house.

This proposal had been pre-announced, but there were a couple of surprises. The additional nil rate band will only be available if you die after 5 April 2017, so it may be worth considering postponing that bungee jump which you had always promised yourself.

Like many tax changes, there was a big bang announcement in the budget but, on looking at the detail after the Chancellor sat down, we see that the full additional £175,000 is being phased in from 6 April 2017 with the full amount not being available unless you die after 5 April 2020.

If you are lucky enough to own more than one residence, the additional nil rate band is only available in respect of one of them, but your executors will be able to nominate which. The house must be a residence of yours and, for example, buy to let properties do not qualify.

The property must be left to a direct descendant, so will be available where you leave your house to children or grandchildren.

One surprise is that, where you downsize or sell your house to, for example, move into a retirement home after 8 July 2015, then the additional nil rate band can be utilised against assets of an equivalent value which are passed to your direct descendants. So, if you sell your house and invest the proceeds in stocks and shares, then stocks and shares up to the value of the additional nil rate band can be covered by it.

Another surprise is that the additional nil rate band will not benefit the seriously wealthy in that where the estate of the deceased has a net value of more than £2 million, the additional nil rate band will be withdrawn at a rate of £1 for every £2 of estate over the threshold.

A final pleasant surprise is that the additional nil rate band, like the existing £325,000 nil rate band, is transferrable between spouses and civil partners. If, on the first death, some or all of the nil rate band is not utilised then, on the second death, some or all of a second nil rate band can be utilised.

By way of a simple example, if a married couple owned a house worth £1 million and, on the husbands death, he left his interest to his surviving spouse, then this would fall within the spouse exemption and he would have made no use whatsoever of his nil rate band.

If his wife died after 5 April 2020 and the house was still worth £1 million, then, provided that she left the house to her children and grandchildren, two nil rate bands and additional nil rate bands totalling £1 million can be offset.

While on Inheritance Tax, please do ensure that you have an up to date will. Many people have no will at all and one of the effects of this on death is that there can be delays and additional costs in trying to wind up an estate.

Furthermore, there are proposals that deeds of variation may no longer be possible. If you have a will which does not reflect your wishes accurately but believe that things can be corrected after your death using a deed of variation, do not bet on it as the law may have been changed.

If you take nothing else from this then you should have a will prepared and signed. If you already have one, do make sure that it reflects your intentions.

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