Chancellor Alistair Darling has announced that the inheritance tax threshold will double from £300,000 to £600,000 from today for all married couples including those in civil partnerships.
Speaking in his pre-Budget Report, Darling said that as of 2010 it would be raised to £700,000 and would be backdated for widows and widowers indefinitely.
He rubbished Conservative proposals to raise the threshold to £1m saying the extra money would be used for health and education.
Chiltern says the announcement merely formalises what is already the case for many couples applying tax planning measures.
Director of inheritance tax Ian Maston says: “This change is welcome because it will save couples the need to jump through hoops when planning their wills. Prudent people would have already arranged their wills to achieve this anyway, so the Chancellor’s announcement won’t save them a penny.”
The Tories have attacked the move saying Darling has not doubled the threshold as under common inheritance tax planning, couples can already transfer £600,000 tax free, for example giving £300,000 to the children and the remainder to the spouse.
They say wills can be redrafted after death, with the permission of any children, if the tax planning had not been done.
Skandia head of tax and financial planning Colin Jelley says: “The future inheritance tax liability for some widows and widowers could be reduced by as much as £120,000. However, there will also be those for whom it makes no difference such as divorced people, those who have never been married and those who, with advice, had already made plans to maximise their use of the nil rate band.”