UK Chancellor George Osborne announced a big change to the inheritance tax limit in the government’s emergency summer budget. With this in mind, Prestige Tax and Trust services asks; what is the inheritance tax limit?
The inheritance tax is a levvy that the UK government applies to the estates (money, property, assets etc.) of people who have passed away. At a certain point, the estate has to pay a rate of 40% of its value to the taxman. However, you can secure a reduced rate of 36% on some charitable donations.
At present, the inheritance tax threshold is £325,000. This means that if your estate is worth less than £325,000 you pay no inheritance tax. If it’s worth £500,000, for example, it would pay 40% inheritance tax on the difference between £325,000 and £500,000; £175,000. It’s vital that you learn how to work out inheritance tax if you want to pass your assets onto your loved ones when you die.
New inheritance tax rules
However, these rules have now been somewhat changed. David Cameron’s Conservative Party were elected to government in the recent May national election. Re-appointed UK Chancellor George Osborne announced the new government’s first fiscal policies in the July summer budget.
The Chancellor announced the introduction of a new inheritance tax threshold. The Telegraph reports that the government will raise the threshold to £500,000 per person from 6th April 2017. The limit now includes a “family home allowance” of £175,000 per person, which is transferrable to a spouse.
This means that married couples or civil partners will now be allowed to pass £1 million in assets, which include the main family home, to their children or grandchildren. However, the government will gradually phase out this allowance for estates worth £2 million or more.
Prestige Tax and Trust Services
This is a significant change to the inheritance tax limit, and it’s hard to comprehend all of its ramifications. If you want to ensure you understand how these changes will affect your estate, come to Prestige Tax and Trust Services. Our team have the legal expertise you need to ensure your estate pays the correct amount of inheritance tax when you pass away.