‘It took 13 years for us to make it big’
two individuals’ allowances can be combined when the second person dies, giving a total of £650,000.
From April 2017 an additional £100,000 allowance per person has applied to a family home. This will rise to £175,000 each by 2020, meaning a couple will be able to shield £1m from the Government.
Another concession here is “lifetime gifting”. Danby Bloch, a tax expert at advisory firm Helm Godfrey, said this tended to help the very wealthy who could afford to make large tax-free gifts throughout their life, but was more regressive for the “middle rich”, whose wealth would primarily be property.
Ernst & Young undertook comparisons across a number of different countries using an estate valued at £1.5m, made up of half property and half cash, being passed to a direct descendant (such as a child or grandchild).
The calculations assumed that the estate was owned by a married couple and was passed between them when the first spouse died. This allowed for regimes, such as in Britain, where exemptions can be combined.
Of the countries analysed using these assumptions, no tax at all would be paid by the family in Australia, Italy, the US and Sweden.
A Canadian family would pay no inheritance tax, although some capital gains taxes might apply at death. A family in Singapore might have to pay stamp duty on transferred property or shares.
In Switzerland death duties are calculated regionally, by canton. Some levy none.
Germany’s system means the estate would be taxed at either 15pc or 4pc, depending on whether the descendant moves into the inherited property. It would be taxed by a maximum of 15pc in Denmark.
Britain, meanwhile, would tax the estate at 40pc above the couple’s combined personal allowances, which in this case means a payment of £259,000. This equates to an effective tax rate (the tax paid as a proportion of the value of the estate) of 17.3pc. While this