Family Home Allowance

The new tax free allowance will be made up of the current individual inheritance tax (IHT) allowance of £325,000 (£650,000 per married couple) and an additional “family home allowance” of £175,000 per person, which is transferrable to a spouse upon death, giving them a £350,000 allowance.

Parents will therefore be able to bequeath £1 million to their children or grandchildren, without them paying anything to the tax man, as long as the estate includes the family’s principal residence.

Available to existing widows and widowers

The new allowance will also be backdated to ensure that it benefits widows and widowers whose spouses have recently passed away.

£2 million limit

The full benefit will be only be available to those passing on estates worth up to £2 million. It will then be reduced by 50 pence per pound and so will be withdrawn by the time the estate is worth £2.35 million. People leaving an estate worth more than this will be unaffected.

Children to benefit from parents’ hard work

Head of Graysons’ wills and probate team, David Coffey (pictured), says “As property prices rise, more and more people are having to pay inheritance tax on the value of property that their parents worked all their lives to pay for, so this has to be a good move. It is unclear at present whether there will be any claw back or other penalty if the children or grandchildren sell the property on, but we will certainly be watching this carefully and will report further in due course.”

Need more advice on inheritance tax?

For further advice and assistance on any issue relating to your estate, and how best to pass it on to your family, please read our wills and probate pages here, or contact us on 0114 272 9184 for a confidential discussion. You can also email us at wills@graysons.co.uk