Inheritance Tax Threshold Set To Double
Chancellor Alistair Darling's Pre-Budget Report has kicked off with a massive increase to the inheritance tax threshold.
As it stands, the current value of assets left behind by someone upon death is set at £300,000 whereby any inheritance surpassing this value incurs a 40% inheritance tax charge. Assets left to a surviving spouse remain exempt as the inheritance tax rule does not apply.
The PBR has now combined the threshold for married couples and civil partners to £600,000, with a further increase to £700,000 by the year 2010. This means that when the surviving spouse then passes away no inheritance tax will be charged on the first £600,000 of their estate.
This increase in the inheritance tax threshold will be backdated for those already widowed allowing them to benefit from the proposed combined allowance.
The Chancellor added in his speech that for future budgets both house prices and inflation would be taken into account before the inheritance tax level is set. He claimed that the current value of 97% of UK homes is less than the new combined threshold allowance.
Published on October 10, 2007
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