Proposed changes to Inheritance Tax

Posted 18th March 2015

Written by Newtons Media Team

The papers are reporting proposed changes to the Inheritance Tax rules which would enable parents to leave their homes worth up to £1M to their children inheritance tax free.

People can already make use of their existing tax free allowance of £325,000 before their estate is required to pay inheritance tax.  Husband and wife can leave their allowance to each other on the death of the first spouse, leaving the estate of the remaining spouse a tax free allowance of £650,000.

The proposed changes would give an additional allowance of £175,000 per person meaning that a couple could leave their home worth £1M to their children free of inheritance tax.

This proposal was in the last election manifesto but was blocked.

With a national average property price of less than £300,000 we are surprised by this proposal which will be of benefit to a tiny proportion of the population.

With inheritance tax sometimes being considered an “optional tax” given various methods of mitigating the liability and given the small proportion of voters who will benefit, we wonder whether this proposal will do more to ostracise than encourage support.

For help with wills, estate planning and trusts, please do not hesitate to make an appointment with a member of our private client team.