Ahead of next month's Budget announcement there has been plenty of news surrounding Inheritance Tax (IHT) and how it will affect the British public. However, before any changes are laid out by Chancellor of the Exchequer George Osborne, research carried out by NFU Mutual claims that 3,000 UK families may miss-out on IHT breaks as a result of having already sold their family home.
The current IHT threshold means that individuals pay tax on estates worth £325,000 or more, but changes to legislation mean that this is due to increase to £1 million in the near future thanks to the introduction of additional allowances.
However, the proposal of an extra £175,000 allowance per individual will only be applicable to main residences. Sean McCann, a chartered financial planner for NFU Mutual, says that this is expected to "stick in the craw of those who have already sold the family home to move in with relatives or even to pay for the costs of care."
McCann goes on to say that while the Government acknowledges that the existing IHT threshold is "far too low", it would actually be "much fairer to apply an overall increase rather than tinker with the rules around who can benefit and who can't.”
It has been suggested that the change in IHT rules may lead to elderly people upsizing their homes in order to benefit most from IHT breaks, or potentially house-sitting for their beneficiaries before they pass away. Such changes could have a huge impact on the UK property market.
Do you think these changes are fair, or do IHT rules require yet more revision by the government?