The £1,000,000 inheritance tax exemption

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Mr Osborne has made good his manifesto commitment to ease the burden of inheritance tax, but his approach is not simple.

A main residence
One of the surprises in the Conservative manifesto was the proposal to create a new transferable main residence band of £175,000 per person for inheritance tax (IHT). The idea was criticised by many, including the Institute for Fiscal Studies which said “it would have been much simpler and arguably fairer” to just increase the nil rate band to £500,000. In a leaked paper published by The Guardian, even the Treasury, said that “there are not strong economic arguments for introducing an inheritance tax exemption specifically related to main residences”.

Nevertheless the Chancellor has gone ahead with the plan, but it is rather more complicated than the manifesto suggested:

The leaked Treasury paper estimated that the measure would still leave 6% of estates liable to IHT by 2020, so you cannot forget the tax completely. If you would like to discuss what impact the measures will have on your long term estate planning and what actions you should consider, please contact us.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

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