Change to inheritance tax is not yet in force

QAIs the £1million inheritance tax allowance for family homes, which was announced last year, still available following the change in Conservative government after the Brexit vote? My wife and I are in our 70s, we have a home worth £500,000 and savings of £400,000, and we plan to leave everything to our adult children. FIRSTLY, it’s important to make clear that the “£1million inheritance tax allowance” you refer to hasn’t yet come into force, and the current tax-free allowance for married couples is a less generous £650,000.

The additional allowance – worth up to an extra £350,000 for a married couple, and technically the “main residence nil-rate band” – is due to be phased in from next April.

In 2017/18, the extra allowance is due to be £100,000 per person (£200,000 for a couple), rising to £125,000 in 2018/19 and £150,000 in 2019/20.

Only from 2020/21 is it due to reach £175,000 per person – potentially giving a couple an extra £350,000 of relief on top of the existing £650,000.

So, assuming the extra allowance goes ahead as planned, your £900,000 total of property and savings would only be free of inheritance tax (IHT) if you and your wife lived until 2018/19 or beyond – based on the existing allowance of £650,000 plus the £250,000 of extra relief available from April 2018.

In addition, Theresa May has said that tax policy will prioritise ordinary people rather than the wealthy. Conceivably, if the planned £1million allowance for couples were seen as overly generous to the wealthy, it might be changed or delayed.

In the meantime, there are plenty of opportunities for reducing IHT, from making cash gifts while you are still alive to using business property relief.