IHT changes welcomed by middle England households says
Grant Thornton
Tuesday 9 October 2007
Changes to inheritance tax (IHT) rules in today's
Pre-Budget Report (PBR) will be welcomed by middle England but not
by siblings living together in the family home, according to
leading business and financial adviser Grant Thornton.
Ian Miles, an IHT expert at Grant Thornton, says the new
rules will ease pressure on married couples and registered civil
partners as once they lose their loved one, the surviving spouse
will be able to utilise their nil rate band.
"The changes mean that married couples and civil partners
will be able to share the joint nil rate band so that unused relief
will be available to the surviving partner on their death. This
will also be backdated to include those estates currently held by
widows and widowers where the nil rate band was not fully used or
used at all on the first death. It will also negate the need for
the nil rate band discretionary trust in a partner's will," he
says.
"The announcement means that married couples and civil
partners will be able to leave their entire estates to their other
halves if they choose to do so without having to worry about the
inheritance tax consequences."
The Chancellor also said in his PBR that 97% of households
would fall below the new threshold and that in future years both
the average house price and the retail price index will be
considered when new levels of the IHT nil rate band are
set.
"Over the last decade, the average house price in England
and Wales has escalated by 140%, compared to inflation which has
risen by just 33%*. If IHT had kept up with the property market the
nil rate band would be £515,000.
"IHT is a tax that was originally designed to tax the
wealthy and as it now stands it will. The changes made today mean
less of middle Britain will be affected. The new Chancellor has
today rewarded British savers."
Today's announcement will not help siblings living
together, such as the recent case of the Burden sisters as they are
not married or in a registered civil partnership.
Notes to editors:
*Comparing house prices to the retail prices index
Average house prices in England & Wales in April -
June 1997 were: £76,382 and in August 2007 were: £182,914. This
represents an increase of almost 140%.
The retail prices index was 156.3 in April 1997 and 207.3
in August 2007. Therefore, there has been an increase of almost
33%.