HOME owners in Ludlow and south Shropshire planning to take advantage of a new tax break on what they leave to their children are being warned to study the rules carefully.

Tax and trusts lawyer Gary Priest, a partner at Ludlow law firm mfg Solicitors, has flagged the issue after becoming concerned that too many people will think they are automatically better off by the changes to inheritance tax coming into force in April this year.

The change, which was an election pledge by the Conservative party, can potentially save families up to £140,000 in inheritance tax.

It is known as the Residential Nil Rate Band and gives people an additional tax allowance that applies to their home. The new allowance is being introduced in April, although the full benefit will not be available until 2020/21.

However, Gary Priest says people across the county must look carefully at their existing arrangements as certain types of wills and discretionary trusts can still incur very hefty inheritance tax.

“As with all tax rules, the devil is in the detail and we are advising people to be extremely careful with their calculations with the change only months away,” he said.

“For a start, this benefit is only available where the main residence passes to a very narrow range of beneficiaries such as to children or other descendants on death. It is also only claimable where the net estate is less than £2.2 million.

“Discretionary trusts need a lot of care to be taken. In some cases this can mean the additional tax saving is forfeit and on top of that, there are complicated rules about for people who downsize their property and release some of the value.”