The Summer Emergency Budget: great for couples, but…

In his first Budget of the new parliament, Chancellor George Osborne announced some new measures, including a very welcome change to Inheritance Tax (IHT).

Currently, 40% Inheritance Tax kicks in when an estate is valued at £325,000 or more. Given the house prices in our part of Hampshire and Berkshire, can be more than reached by the value of the family home alone. If you are married or in a civil partnership you can pass on any unused allowance to your spouse.

Chancellor Osborne stated than from April 2017, every individual will be entitled to a family home allowance so they can pass on their home tax-free if the home is worth less than £1 million.

From April 2017, individuals will be able to pass on assets worth up to £500,000, including the family home, without paying any IHT. By combining their allowances, married couples can pass on £1m worth of assets.

Protecting your assets in a divorce

The implications of this change are that, as a couple, you can pass on your family home without losing much of its value, whereas as a single person, you could be taxed 40% on part of its value.

It’s just one of the many ways that divorce can seriously affect your finances, and also one of the prime reasons that our partner Anne Leiper offers specialist advice on financial settlements. With potentially up to £200K worth of tax at stake, it’s definitely worth taking advantage of our free 30 minute consultation to discuss your options if you and your spouse divorce.