Introduction Of The New Main Residence Allowance As From April Of Next Year

In the tax year, in April, the government raked in £4.7billion in inheritance tax – an increase of 22 percent on the year before. Due to the huge rise in housing prices, property inflation has pushed those, who never thought that they would be, into millionaires – but this has also led to an increase in people who are hit by inheritance tax. After the election in July 2015, Chancellor George Osbourne announced some long overdue changes to IHT in his Emergency Budget, and these will apply specifically to the main residence. This will mean that the total inheritance tax threshold for those who own a family home will be increasing until it reaches £500,000 by 2020. Essentially, the new family home allowance will provide an extra £350,000 worth IHT-free allowance for those who are married or are civil partners. The government are hoping that this will lead to a reduction in the tax bill for families whose parents’ or grandparents’ estates have only risen over the current tax-free threshold due to the huge rise in housing prices.

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