Inheritance Tax Threshold Increase

The new main residence allowance which came in on the 6th April 2017 significantly increases the Inheritance Tax threshold of married couples and registered civil partners.

The change means that eventually parents and grandparents will be able to pass on assets worth up to £1,000,000 including a family home without any Inheritance Tax being charged.

Currently the base rate for the tax threshold is £325,000 with successive relief for marriage couples and civil partners totalling £650,000.

However from the 6th April 2017 the main residence allowance will be introduced gradually, starting at £100,000 and rising to £175,000 in April 2020 (now). That creates a tax threshold of £1m per couple.

As with the standard nil rate band threshold, the property allowance will be transferrable to a surviving spouse or registered civil partner.

That is very good news for a majority of property owners in the UK where house prices have now increased over the years to well in excess of the joint tax threshold of £650,000.