Many couples living in London or the south east, have seen the value of their home rise to well above £650,000 – this is, in effect, the inheritance tax (IHT) threshold figure for a couple. In recent years, this has left the children of the parent who has died, facing a 40% tax bill on the value of the Estate above £650,000.
In the Budget before the Election, the Conservatives stated that they would be introducing a new £175,000 per person transferable allowance for main residences, when they are passed to children and grandchildren. For many couples this should result in a total allowance of £1 million (£325,000 plus £175,000 each).
The new Government is likely to push ahead with its IHT proposals, but is it such a good idea to have an IHT exemption specifically related to main residences? Inevitably, it would encourage further investment in owner-occupied housing, rather than more productive investments. Would it also not discourage downsizing late in life and so, we’ll see yet more elderly couples “rattling around” in homes that are much bigger than they require?
To Discuss Further Email Mark.Lyon@dg-law.co.uk
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