Newspaper article The Journal (Newcastle, England)

Tax Break for Those in Line to Inherit Family Homes

Newspaper article The Journal (Newcastle, England)

Tax Break for Those in Line to Inherit Family Homes

Article excerpt

Byline: Vicky Robson

RELATIVES who stand in line to inherit property won a break after the Chancellor scrapped inheritance tax on properties worth up to PS1m this week.

From April 2017, a homeowner will be to leave a substantial house to relatives after the price was changed from the current threshold of PS650,000 on which individuals incur a 40% tax rate.

George Osborne also used the first all-Tory budget for nearly 20 years to reduce tax relief for buy-to-let landlords and restrict mortgage interest relief on residential property to the basic rate of income tax.

Delivering his summer budget speech in the Commons on Wednesday, Mr Osborne said: "The wish to pass something on to your children is about the most basic, human and natural aspiration there is. From 2017, we will phase in a new PS175,000 allowance for your home when you leave it to your children or grandchildren.

"It sits on top of the existing PS325,000 threshold which will be fixed until the end of 2020-21. Both allowances can be transferred to your spouse or partner."

Confirming the relief would be tapered away for homes worth more than PS2m, Mr Osborne added: "The result for families is this. You can pass up to PS1m on to your children free of inheritance tax."

Property website Zoopla were quick to forecast that nearly one million properties in England, Scotland and Wales could benefit from the Chancellor's proposals to raise the inheritance tax threshold to PS1m for a couple passing on a home.

This would raise the total number of homes completely exempt from IHT from 26.33 million to 27.28 million, an increase of 953,498.

Beneficiaries in London stand to gain the most from the new ruling, with 428,011 extra properties escaping IHT, said Zoopla, with a further quarter of a million homes in the South East benefiting. …

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