Inheritance Tax to be Cut Under Conservatives

Mortgage Relief

The Conservatives have promised that if their party wins the 7 May election they will cut inheritance tax (IHT). This will be done through introducing a new allowance that will benefit 22,000 families by taking their family home out of IHT. IHT is currently payable at a rate of 40% on the value of an estate above the £325,000 threshold – or £650,000 if a couple takes advantage of the existing allowance. Under the new allowance, family homes worth up to £1million would escape IHT if they are left to the owner’s children or grandchildren. The allowance available will then be gradually tapered so that those who own property worth more than £2.35m will not benefit.
The costs, however, for this allowance will be paid for by a £1bn raid on pension tax relief for people earning more than £150,000. This new proposal from the Conservatives has had a mixed response…

Shadow home secretary Yvette Cooper told Sky’s Murnaghan programme it is the “wrong priority” and “won’t affect 90% of estates”, and The Institute For Fiscal Studies said the change would “disproportionately” benefit those on higher incomes. Inheritance tax is still a ‘hot topic’ that continues to come under scrutiny. To find out more about ways to reduce your IHT liabilities watch our seminar on IHT planning.