The Conservative Party has now confirmed its election campaign promises in relation to inheritance tax (IHT). The new Government will introduce a transferrable main residence allowance of £175,000 per individual in addition to the IHT nil rate band which is currently set at £325,000 per individual. This is in relation to their commitment to take the family home out of the IHT net for all but the richest in society.
What does this mean?
This effectively creates a £500,000 IHT threshold for individuals in certain circumstances. This could be transferred to the surviving spouse or civil partner if unused on the first death. Therefore this could be an effective IHT threshold of £1m in certain circumstances.
It will be extremely interesting to receive more of the detail on this and how this is going to work in practice. This may well be another dimension of planning that individuals will have to consider and detailed specialist advice on this will be absolutely necessary to ensure that maximum use of the allowances available is being made.
Deeds of variation
There has also been confirmation that the Government will announce its findings from the review of how Deeds of Variation are used for tax purposes, which was announced in the Budget earlier this year, in the autumn.
Deeds of Variation are an extremely useful tool not only for tax but other asset protection reasons and we will be looking forward to the report with interest.
On June 19, 2015