Darling Doubles Inheritance Tax Threshold
Hooray! Looks like Labour’s Alastair Darling has been shaken up so much by Tory Leader David Cameron’s pledge to raise the inheritance tax threshold, he’s decided to get in there first!
So the new level means couples have a combined threshold of £600,000, which is set to rise to £700,000 by 2010. What this means is that when a couple dies, inheritance tax won’t be charged on the first £600,000 of their estate if they haven’t used any of it before… say if the first partner had already left assets to kids or whatever.
Now a lot of analysts reckon this won’t benefit that many people, but considering the old threshold was £300,000 and the meteoric rise of house prices recently we have to disagree. Now you don’t have to scratch around for 40% before inheriting mum and dad’s £305,000 house, which was meant for you anyway!
The other benefit is this new level will be backdated to widows and widowers indefinitely.
However every silver lining comes with a cloud so here’s the bad news… the new allowance doesn’t apply to unmarried couples, siblings who have been living together… and because IHT generated £3.5 billion for the government between 2006 and 2007, you can bet taxes will go up in other areas… And the other question is whether this is enough?
After all the Tories are talking about raising the threshold to £1 million… and cutting taxes across the board… of course if they stick to their promises or not is a whole other question!
Filed under: Take a Break, Sound Advice, Save Money
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