In 2015 George Osborne announced a new inheritance allowance of up to £1 million tax free as from 2020 if an estate is left to children or grandchildren. Raising the previous tax-free allowance from £325,000 to £500,000 per person, which means that married couples or those people in a civil partnership can inherit as much as £1 million from an estate, tax free.
The allowance will go up in increments until the year 2020, and the following RNRB, residence nil-rate band amounts will be added to the previous £325,000 allowance as from 6 April 2017 when a residence is passed on death to a direct descendant:
£100,000 in 2017 to 2018
£125,000 in 2018 to 2019
£150,000 in 2019 to 2020
£175,000 in 2020 to 2021
It will then rise with in-line with CPI, consumer Price Index from 2021 to 2022.
In a recent article published by Property Industry Eye they question whether homeowners have been sold a dud, as the problem with this new threshold seems to be that house prices in some parts of the UK, for example London and the South East are rising faster than the new tax allowance. It could also have a negative effect on available housing for those people trying to move up or even buy a first time house as people who own more expensive houses are forced to sell their properties and move into smaller properties to avoid going over the new inheritance threshold.
Critics are saying that the Government has introduced these changes to appeal to the masses and are instead hitting investors hard by increasing Stamp Duty and reducing the relief on the mortgage interest.
If you would like to find out more information about recent changes to Stamp Duty, Inheritance tax or any other property related issue why not pop into your local branch of Intercounty for a coffee and a chat or call our team on 01279 655248.