Chancellor George Osborne is expected to announce changes to the Inheritance Tax threshold – and here’s how the UK property market will benefit.
- Today sees the first all-Conservative Budget speech since 1997
- One of the announcements George Osborne is expected to make is a change to the Inheritance Tax threshold, increasing it to £1 million for married couples
- He will also outline plans to add a “family home allowance” in an attempt to bring more larger, high-end properties back onto the market
Today (June 8th) as George Osborne gives his first Budget speech of the new all-Conservative government, it’s widely believed that he reveal changes to the Inheritance Tax threshold – and this could be good news for the UK property market.
Currently, individuals are allowed to pass on £325,000 worth of assets, and £650,000 for married couples, which includes property, to children or loved ones tax free. Inheritance Tax is currently levied at 40% of the property’s value above these thresholds.
Later today it’s expected that the Chancellor will raised this threshold to £500,000 for individuals, and £1 million for married couples by introducing a “family home allowance” of £175,000 per person. This means that married couples will be able to bequeath up to £1 million, which will include real estate, completely tax free.
Crucially for the property market, however, Osborne will also announce plans for a new “Inheritance Tax credit”. This means that individuals and married couples will be able to downsize from their current property to a smaller one without fear of missing out on this new £175,000/£350,000 family home allowance.
The government, which estimates that 22,000 families will benefit from these changes, believes that by removing the threat of missing out on this new allowance, more people will be encouraged to downsize to a smaller property if they so wish, helping to bring more larger properties back onto the market and driving buyer and seller demand.
You can follow Select Property’s Budget 2015 live blog, analysing how all the latest changes and reforms will affect your UK property investment.