The recent Budget saw the Chancellor announce reforms to Inheritance Tax rules.
Currently, a married couple are able to access allowances of £325,000 each, which can be doubled up and applied as a single allowance of £650,000 when they are passing their combined estates to their children (known as the Transferable Nil Rate Band).
For many people this will mean no Inheritance Tax will be paid by their children, however, even more generous provision has now been announced.
The government has announced an additional allowance of which is currently at £100,000 and will increase to £175,000 per spouse which is to be specifically set against a value of the family home.
This will operate the in the same way as the Transferable Nil Rate Band and therefore will most likely be applied on the death of the second spouse. This means that unless both spouses were to die before April 2017 most families should be able to access these increased allowances.
On the face of it, it would appear that families now have a £1million allowance for Inheritance Tax purposes. However, it should be borne in mind that the additional £350,000 can only be set against property and cannot be used to offset the value of any savings or investments.