It has been announced that the Tories have agreed to sacrifice their plans to raise the inheritance tax threshold to £1 million as part of the agreement reached with the Liberal democrats in order to form the new coalition.
The current inheritance tax threshold, the amount that an individual can leave in their estate without paying inheritance tax, is £325,000. A combined amount for married couples of £650,000. Since 2007 it has been pledged by the Tories that this threshold would be increased to £1 million as they did not believe that the rates for inheritance tax have moved in line with inflation. Inheritance would therefore have become only a concern for millionaires.
Having previously suggested that this would not be something they could immediately implement, the proposal has been further diminished as part of the agreement reached with the Liberal Democrats. Of the proposed increase to a £1 million threshold a Conservative source has said: ‘Inheritance tax has been sacrificed as a priority. That is unlikely to be achieved within this parliament.’
So without the proposed increase that may have been on the table, it is as important as ever to consider estate planning and inheritance tax.