New inheritance tax changes allow couples to pass on as much as £900,000 to children
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A new change to inheritance tax will allow married couples and civil partners to pass on a potential £900,000 to relatives.
The new nil-band rate, or inheritance tax allowance, will officially come into effect on Friday 06 April.
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Hide AdCurrently each person can pass on £325,000 to a descendant tax free – this figure is frozen for 2018/19.
However, if the estate includes the home, individuals can get an extra allowance under the ‘residence nil-rate’, an allowance increase of £100,000 to £125,000 this tax year.
Once added onto the inheritance tax allowance an individual can effectively pass on £450,000 tax free – added on to the partner’s allowance, this would allow £900,000 to be passed on to children or grandchildren.
Gareth Shaw, Which? Money Expert, said:
“The new tax year sees people able to pass on an extra £25,000 to their heirs tax-free - if your estate includes your home. This figure set to rise further over the next few years and there could be other announcements in 2018.
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Hide Ad"To work out how best to approach these changes and navigate this often confusing system, it may be worth consulting a financial adviser to ensure these new tax rules work the best they can for you and your loved ones."