Changes to inheritance tax rules are good news for homeowners
THERE has always been one tax that I feel has caused much upset with many of our clients and that is inheritance tax. It was therefore great news to see that Mr Osborne has changed the unpopular inheritance tax threshold in response to pressure from homeowners who felt that paying two hefty sums of tax on their property (stamp duty on purchase and inheritance tax on death) was excessive.
A survey in March by YouGov, found that 59% of voters thought the tax was unfair.
Now the Chancellor has announced that as of April 2017, the inheritance tax threshold will be phased up to increase to £1m by 2020-21.This gradual raising of the threshold over four years will allow a couple to pass a house worth up to £1m to their children or grandchildren upon death without incurring a tax charge.
The change is not as instant as some homeowners might have hoped for, but it will still benefit the vast majority of homeowners.
This could mean that older people with larger homes may not feel the need to downsize to a considerably smaller home or indeed at all and may like to make full use of the thresholds by still maintaining a larger property.
Mr Osborne has assisted this by making sure that if someone downsizes before they die, their tax-free exemption will stay at the value of the house that they sold. I believe this is good news, particularly for those who are considering downsizing, yet still want to retain substantial value in their homes.
This could prompt some to look at the higher end of their budget, expecting the value of their home to increase, and wishing to pass as much wealth as possible onto their families.
WELCOMETAX CHANGES: Simon Roberts, managing director of Roberts Newby which is now part of Strutt & Parker, says raising the inheritance tax theshold will benefit the majority of homeowners.