Osborne ‘to reform inheritance tax’

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Published: Tuesday 17th March 2015 by The News Editor

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George Osborne has drawn up plans to allow parents to leave homes worth up £1 million to their children without paying inheritance tax, according to leaked Treasury papers.

The Guardian reported that it had seen documents which showed the inheritance tax bill on properties worth up to £2 million would be cut by £140,000 under the scheme.

The papers, marked “sensitive”, note the main beneficiaries of the plan – which would cost the Exchequer almost £1 billion a year – would “most likely benefit high income and wealthier households”.

It estimates that by 2019-20, around 20,000 fewer estates a year would be liable for any inheritance tax at all.

It is understood the measure will not feature in Mr Osborne’s final Budget of the current parliament tomorrow but could be taken up by the Conservatives if they regain power in the general election in May.

The scheme is said to involve the creation of a new tax free band worth £175,000 per person on a family home, that could be transferred between married couples making it worth a maximum of £350,000.

It would then be added to the existing inheritance tax threshold, where no tax is paid for the first £325,000 on the value of an estate – an allowance that can also be transferred between married couples making it worth £650,000.

The paper shows that – by adding the existing maximum allowance of £650,000 to the new maximum relief of £350,000 – properties up to £1 million could escape inheritance tax altogether.

The paper, written by officials for the Conservative Treasury minister David Gauke, notes the scheme will be “very popular with the public and in the media”.

“It will allow you to say you are exempting those with modest homes from inheritance tax (with up to £1 million of assets) exempted in certain circumstances,” the paper states.

“This reflects the concern raised by the public about rising house prices increasingly leading to estates with a modest house particularly in London and the south east paying inheritance tax.”

A Treasury spokeswoman said they had no comment on the report.

Published: Tuesday 17th March 2015 by The News Editor

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