A welcome change which means that heirs will pay less tax on homes inherited from direct relatives from April 6th. Currently inheritance tax is set at 40%, but individuals will be able to pass on £175,000 worth of property tax fee – up from £150,000 in 2019-20.
The first £325,000 of an individual’s estate is already tax-free, and the £175,000 threshold for homes left to descendants is in addition to this. This takes the inheritance tax thresholds for individuals’ estates in 2020-21 to a maximum of £500,000. However, married couples and those in civil partnerships can pool their individual allowances, taking the total exemption to £1,000,000 in 2020-21.
This relief is tapered for individuals who pass on properties worth more than £2M.