Millions of older people may miss new inheritance tax break
ALMOST two million older people risk missing out on a new inheritance tax break, potentially worth tens of thousands of pounds.
Almost two million older people risk missing out on a new family home allowance
From April 6, the new family home allowance will allow homeowners to pass on an additional £100,000 in property value free of inheritance tax (IHT), rising steadily to £175,000 by 2020.
This is on top of the nil-rate IHT threshold of £325,000, which couples can double to £650,000.
However, the family home allowance applies only to a main residence, if it is passed on to children or grandchildren.
It does not apply to other family members, including siblings, and more than 1.7 million over-55s could miss out as a result, according to research from LV= Legal Services.
The tax break allow homeowners to pass on an additional £100,00 in property value free of IHT
Leading wealth management firm explains inheritance tax
That is because they have assigned a brother or sister to inherit their family home, which disqualifies them from the tax break.
With the potential to save a lot, it is time and money well spent
It is estimated this will hit one in 10 families, with couples potentially facing an additional inheritance tax bill of up to £140,000 as a result.
This is in addition to the nil-rate IHT threshold of £325,000, which couples can double to £650,000
LV= Legal Services director Martin Milliner, said the family home allowance is a boost for those who have seen their homes rise in value and want to pass on this wealth: “However, it is crucial they do not fall prey to the sibling trap.”
Many people may need to rewrite their will.
“With the potential to save a lot, it is time and money well spent,” he added.