The new Conservative budget was announced and it had numerous changes and decisions across the board that will affect everyone up and down the country. For this blog, we'll be focusing on the changes in inheritance tax and what it could mean for you.
Inheritance tax is paid when someone dies if their estate is worth over a certain amount. The amount payable comes out of the value of the estate. Spouses are exempt from inheritance tax so if your husband, wife or civil partner dies you do not pay anything.
At the moment, inheritance tax is paid at 40% if the estate is worth over £325,000. Married couples and civil partners are entitled to double the allowance, so before the Budget the threshold would have been £650,000.
George Osborne announced that from 2017 a new £175,000 allowance on homes left to children or grandchildren would be applied. This would be in addition to the £325,000 threshold which will be fixed until the end of 2020-21.
The new budget means that the individual inheritance tax threshold is going up to £500,000. For married couples and civil partners it is £1million before a tax charge is triggered.
The change will see many more families not paying inheritance tax and therefore being a lot better off when they inherit an estate from a loved one.
If you do think you will still be liable for inheritance tax there are ways to mitigate against large payments to the tax man. If you're interested in learning more, visit our blog Top Tips for Reducing Your Inheritance Tax Liability.
For professional Will Writing and Inheritance Tax services our expert team of Wills, Tax, Trusts and Probate Solicitors at Slater and Gordon UK can help. Call us on freephone 0800 916 9056 or contact us online and we will call you.