U.K.: Inheritance Tax Cut For Couples

LONDON, England (The Telegraph), October 9, 2007: An estimated 12 million married couples will benefit from a backdated cut in inheritance tax. The threshold at which the unpopular 40 per cent duty is levied on inherited assets is being raised for married couples and civil partners from £300,000 to £600,000. Alistair Darling said this threshold would rise further - to £700,000 - in three years time. Assets left by a husband or wife to their spouse have always been free of tax, no matter what their value. However when the second half of the couple died, they could only use their own tax allowance of £300,000 when leaving their assets to their family. With property prices rising sharply in recent years, many bereaved families have lost out to the tax. Couples – either married or in a civil partnership – can merge their two tax-free allowances of £300,000 to create a larger allowance of £600,000. The announcement would benefit 12 million married couples and civil partners. This figures includes an estimated 3 million widows and widowers, who will now be able to take advantage of the combined allowance and make backdated claims. The Government believes this amounts to a £1.4 billion tax give away. Experts sau this should simplify the whole process of drawing up wills and discourage complicated tax planning – which has seen many couples trying to avoid the much-loathed tax. By Harry Wallop Consumer Affairs Correspondent © Copyright of Telegraph Media Group Limited 2007