Conservatives will end inheritance tax on family homes up to £1m
A Conservative government would end inheritance tax on family homes worth up to £1m.
It means parents will be able to pass them on to their children without paying tax. The cost of the Conservative policy will be paid for by reducing tax relief on the pension contributions of people earning more than £150,000.
As it stands inheritance tax is 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.
Under the Conservatives proposals parents will each be offered a further £175,000 allowance to enable them to pass property on to children tax-free after their death.
The new "family home allowance" will be transferable on the death of one spouse and can be added to the existing £325,000 transferable allowance to bring the tax-free total up to £1m.
The full amount would be transferable even if one member of a married couple has died before the policy comes into effect, and so would benefit existing widows and widowers.
For properties worth more than £2m, the new allowance would be gradually reduced, so that those with homes worth more than £2.35m would not benefit from the changes.