Chancellor George Osborne will announce this afternoon in the budget that he will raise the IHT threshold from £325,000 per person to £500,000.
This means a married couple will be able to pass on assets worth up to £1m, including a family home, without paying any IHT at all.
The move means properties worth between £650,000 and £1,000,000 will now be exempt from IHT, when this wasn’t the case previously. Zoopla calculated the proposal will raise the total number of homes completely exempt from IHT from 26.33m to 27.28m, an increase of 953,498.
Londoners will benefit most from the move with an extra 428,011 homes escaping the levy. Almost a quarter of a million more homes in the South East would also escape IHT.
Lawrence Hall of Zoopla said: “Due to rising house prices, the number of families paying death duties would have soared in coming years, so the decision to increase the threshold is a sensible solution to a problem that was bubbling under the surface.
“As with the Stamp Duty changes, these proposals are a much-needed modernisation of thresholds that would have risked becoming obsolete as property values head northwards. Most of us work hard our entire lives so that we can bequeath assets to our children and grandchildren and the increased threshold means fewer families will be stung by the taxman after relatives pass away.”