Emergency Budget 2015 – Inheritance tax changes announced
Emergency Budget 2015 - Inheritance tax changes announced
Changes to the inheritance tax (IHT) rules were announced in the Emergency Budget on July 8th 2015. There have been calls to increase the threshold at which IHT becomes payable as more middle income families are feeling the effects of IHT when their loved ones die.
What are the announced changes to IHT?
- Currently an individual can pass on assets of up to £325,000 free of IHT
- From 2017 a 'family allowance' of £175,000 will be added increasing the existing threshold to £500,000. The £175,000 applies to a person's main residence when it is left to children or grandchildren. Initially the main residence inheritance tax relief will start at £100,000 in April 2017 and will rise to £175,000 by 2020/21
- As any used relief can be passed on to a spouse or civil partner this effectively means that £1 million of a couples' wealth can be passed on free of tax
How many people in the UK pay inheritance tax?
- In 2013 the amount of tax collected through IHT was £3.4 billion, almost double the total of Income Tax collected
- The highest total of IHT raised in one year was achieved in 2007 with £3.8 billion raised
- Around 3% of estates pay IHT on an average estate worth just under £1million
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