A couple is exempt from paying inheritance tax by their children up to 600,ooo pounds now?

Question

But couples never leave property as one dies and a single person is left. I am confused ?

Answer 1

Married couples who organised their wills correctly could make use of both 300k bands .. all he has done is removed the need for your parents to set-up complex 'discretionary Trusts' in order to make use of both 300k bands.

In other words, every couple (or surviving spouse = since it is backdated) is now in the same position as those who set up clever Trusts ..

Thus, for example, if you dad died leaving it all to mum, and the house is worth less than 600k when mum dies, then no Tax to pay.

Answer 2

Currently each individual has a £300K Inheritance Tax allowance. You are right that a lot of people currently die and if they are married leave their house to their surviving spouse.

With careful tax planning, it is possible to leave £300K to (for instance) their children. It can be stipulated in their will that although the children inherit £300K worth of value of the family home, the other spouse has the right to live there until they die. This will currently increase the threshold of inheritance tax from £300K to £600K.

It is confusing and does need careful planning, but the Chancellors announcement yesterday does make it more black and white than it is at the moment.

Answer 3

The threshold for inheritance tax is 300,000 which is called the nil rate band. When one half of a couple dies, all of their estate is exempt of inheritance tax as it passes to the spouse. When the second of them dies, the actual amount exempt is 300,000 anything over that is liable to inheritance tax at 40%


EDIT - Doh! Just seen the report he has doubled the threshold so for above, change the 300,000 to 600,000!!

Answer 4

Dont worry as he will take back much more via taxes on petrol duty,vat,road tax,national insurance.
They have to balance the books somehow and we WILL PAY for it.
Nothing to get excited about.