Government plans to increase inheritance tax threshold

Nick Palmer4

As they get ready for the 2015 Summer Budget on Wednesday 8th July, David Cameron and George Osborne have announced that they will include a measure to allow a married couple to leave their home, valued at up to £1m, free of inheritance tax on death.

The Conservatives included this pledge in their manifesto, and in a recent joint article for The Times, Cameron and Osborne wrote:

“As we promised in our manifesto, we’ll take the family home out of inheritance tax for all but the richest. It can only be right that when you’ve worked hard to own your own home, it will go to your family and not the taxman.”

We will now wait to see the details: whether this will actually be linked to the value of a couple’s residence; how this will interact with the current tax-free allowance (£650,000 for a married couple) which is not linked to any particular assets; if a single or divorced individual will benefit from a £500,000 tax-free allowance; and any other details, such as any overlap with agricultural property relief for farmhouses, whether there will be a minimum period of occupation, provision for individuals who have to go into hospital or a care home.

Nick Palmer is a lawyer at Barker Gotelee, Solicitors in Ipswich.

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