Osborne to scrap inheritance tax for homes below £1million

The end of inheritance tax on family homes worth up to £1m will be announced by Chancellor George Osborne.

British Chancellor George Osborne
British Chancellor George Osborne

He is expected to tell MPs  that the threshold at which the tax is levied will rise for couples from £650,000 after April 2017.

Writing in The Times, PM David Cameron and Mr Osborne said those who worked for their homes should be able to pass them on to family members.

The move fulfils a key pledge made in the Conservative’s election manifesto.

Mr Cameron and Mr Osborne also unveiled housing measures to help people buy and build their own homes reports BBC.

The inheritance tax policy will be funded by limiting the amount of tax relief on pension contributions given to those earning more than £150,000 a year.

In a joint article, Mr Cameron and Mr Osborne write: “As we promised in our manifesto, we’ll take the family home out of inheritance tax for all but the richest.”

They add: “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.”

Mr Osborne has been keen on the idea for nearly a decade, BBC political correspondent Chris Mason said.

Before the election, the chancellor told the BBC the plan “supports the basic human instinct to provide for your children”.

At present, inheritance tax payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.

From April 2017 parents will each be offered a further £175,000 “family home allowance” to enable them to pass property on to children tax-free after their death.

This will be added to the existing £325,000 inheritance tax threshold, bringing the total transferable tax-free allowance from both parents in a married couple or civil partnership to £1m.