Inheritance Tax frozen until 2019

Two months ago the Chancellor, George Osborne, announced that the inheritance tax threshold would be frozen until 6th April 2015, when it would be increased to £329,000.

At the beginning of this week, however, the Chancellor announced that the threshold would not be increased until 2019. This is a move which, according to This is Money, will drag a further 5,000 families into the inheritance tax (IHT) bracket.

The current inheritance tax threshold is £325,000, and has not changed since 2009. 

Even without the extended freeze, the dramatic rise in property values (particularly in the South East of England) has meant that more and more families are falling liable to IHT.

The reason for the change, the Government says, is that it will help to finance the new care home cap of £75,000.

“Plans to freeze the inheritance tax threshold until at least 2019 mean that many people could potentially face a sizeable tax bill if they do not plan ahead, which is why seeking early advice from a financial adviser or retirement specialist is vital to ensure it’s possible both to leave an inheritance and secure a comfortable retirement income,” Matthew Stephens of the Prudential told This is Money.