9 Jul

Govt to abolish inheritance tax on £1m homes

Govt to abolish inheritance tax on £1m homes

George Osbourne has confirmed plans to abolish inheritance tax on homes worth up to £1 million.

It is expected the decision to end inheritance tax on such properties will be funded by limiting the amount of tax relief on pension contributions given to those earnings over £150,000 per year.

Writing in the Times, David Cameron and Osbourne explained the change in policy may help many families across the UK.

"As we promised in our manifesto, we'll take the family home out of inheritance tax for all but the richest," said the politicians.

They added: "It can only be right that when you've worked hard to own your own home, it will go to your family and not the taxman."

The decision to remove the inheritance tax was largely met by approval from a number of pressure groups.

Andy Silvester, campaigns director at the Taxpayers' Alliance (TPA), told BBC News: "Inheritance tax is one of those things, that even for people who frankly would not be hit by it at the moment, is a really unpopular tax.

"People find it fundamentally unfair that income you've already been taxed on in order to buy your house is taxed on when you die.

"In parts of the country the really wealthy are not necessarily living in £1 million houses."

However, Mr Silvester stressed that a long-term plan to contain property prices is to ensure there is sufficient housing stock.

Inheritance tax is currently payable at 40 per cent on the value of an estate over the tax-free allowance of £325,000 per person, although married couples and civil partners can pass the allowance on to each other.ADNFCR-1222-ID-801793786-ADNFCR

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