Inheritance Tax (IHT)
Latest Developments
The government has doubled the inheritance tax (IHT) threshold. It will benefit married couples and civil partners who didn't plan ahead, widows and widowers since it is retrospective.
Inheritance tax is payable upon death of an individual whose estate is over £300,000 which attracts tax at 40% over and above £300,000. In the past inheritance tax was for the very rich, however, substantial increases in house prices in the last decade has meant that even ordinary people are now caught up in inheritance tax.
Previously, tax planning rules enabled couples to qualify for the Inheritance Tax allowance by transferring either the ownership of assets either wholly or partially between husband and wife during lifetime or wholly at death. This would enable both husband and wife’s allowances to be fully utilised without waste. However with the new rules couples can transfer the unused element of their respective Inheritance Tax allowances to their spouse on death.
Since these changes are retrospective it will benefit widowers and their children as widowers can now use their partner’s £300,000 allowance and double the value of the estate on which nil tax is paid.