The changes to inheritance tax that were introduced in the 2015 Budget will soon come into effect, with some becoming the law as early as April 2017. With less than a year to prepare for these changes, it’s important to ensure you know what to expect and that … Continued
Inheritance tax, once only paid by the super-rich, has become a middle-class plague as house prices have soared. But millions will now escape this unpopular ‘death duty’ thanks to a chunky new allowance announced by the Chancellor. For all bar the wealthiest, inheritance tax should no longer be a problem. The new rules mean family members will be able to inherit as much as £1 million from 2020 without paying 40% death tax – so long as the estate goes to children or grandchildren and includes a family home worth between £650,000 and £2m.
Inheritance Tax (IHT) applies to (some) wealth that is transferred on, or shortly before, death. The tax is currently charged at 40%, with each individual receiving an allowance of £325,000, before the tax is applied. Any unused proportion of this allowance is transferable to a surviving spouse or civil partner, effectively doubling the inheritance tax threshold for many couples. An Institute of Fiscal Studies (IFS) observation published last year considered the case for radical reform of IHT.
The inheritance tax nil rate band has now been at £325,000 since 6 April 2009. If it had been indexed-linked, as it used to be, the band would now be £340,000. However, there will be no increases for some while.
