As we suspected, the inheritance tax headline announced before the general election is not quite the ‘magic bullet’ to avoid death duties that it first seemed to be. After the new government’s first budget delivered by George Osborne, the headline appeared to be as follows: “Married couples leaving their family home to their children will be able to leave assets worth up to £1 million free of inheritance tax”.

It may seem like good news at first, but the reality isn’t so great for everyone: From 2017, houses passing on to the deceased’s children or grandchildren - or the proceeds from the sale of a family house - will benefit from an additional allowance. For the children of married couples (or civil partners) this is £100,000 per parent to start with, which means that that no tax will be payable if the total value of their parents’ joint estate (including a house) is less than £850,000.

This figure doesn’t rise to £1 million until 2020.

The figure of £1 million does not apply if you are single at death.

The figure of £1 million appears not to apply if you are divorced at death - and if the second parent to die had to sell the house to pay for care fees, it appears that the allowance may be lost.  

This allowance does not apply AT ALL if you have no children or grandchildren, or if you are not leaving the house to your children or grandchildren, no matter how close you might be to your nieces, nephews, godchildren etc.

And, the existing Inheritance Tax nil rate band of £325,000 (the figure above which tax becomes payable, if it is not to an exempt beneficiary) for people without a residential property, is now not going to rise until 2020-21 - that's 12 years without an increase ......... and how much will houses have gone up in that time!

Specialist Inheritance Tax Planning solicitors aren’t looking for a new career. On the contrary, this subject is becoming more complicated year by year, so it has never been more important to take the right advice from experts in this field.

If you have any questions or concerns about inheritance tax then let me know at timesquestions@anvoner.co.uk and I will do my best to put your mind at rest.