Can you claim the new £1m inheritance tax break?

WARNING: The reforms could leave thousands — especially those with no children — worse off

and the money is being passed to a widowed spouse.

The amount that will be released without probate varies, but most set it between £20,000 and £50,000. For example, Lloyds’ is £50,000, with a separate limit for each of its retail brands, Nationwide’s is £30,000 and Santander’s £25,000.

Among investment companies, Fidelity’s limit is £25,000 and Hargreaves Lansdown’s £35,000.

However, the Government’s own bank, National Savings & Investments, asks for probate on sums as small as £5,000. So a widow could face a substantial probate tax bill in order to release just £5,000 of savings. A spokesman for NS&I says it is reviewing its approach on these matters. How you own your house is also important.

If it is held as joint tenants (‘joint owners’ in Scotland), then it won’t be caught by probate as everything transfers automatically to the survivor.

But many couples own as tenants in common (known as ‘common owners’ in Scotland and ‘coparceners’ in Northern Ireland), meaning each owns a share of the property. In this instance, probate is needed.

For example, the result is that a couple with an estate worth just over £1 million might be faced with a £4,000 probate bill when the first person dies and a further £8,000 when the second dies.

Ben Tyer, a solicitor at GLP Solicitors in Bury, Lancashire, says: ‘This will be common for couples who have children from previous marriages — and therefore want to ensure their own side of the family inherits the property — taking advantage of the residence nil rate band.’

To avoid the probate tax, couples may want to review savings arrangements to put more into joint names and change the way they own their property.