Tories vow to shake up inheritance with £2m tax-free bid

Published on Tuesday 2 September 2008 02:35

CONSERVATIVE plans to overhaul tax rules will mean families would be able to inherit up to £2 million tax-free, it emerged last night.

The new limit is more than three times the current threshold for the unpopular inheritance tax.

It would come about because married couples would be entitled to a 1 million allowance each, transferable to the surviving partner after their death.

Under proposals by George Osborne, the shadow chancellor, put forward at the Tory party conference last year, around nine million families were set to escape paying 40 per cent tax on the original plans to increase the threshold to 1 million. Now, many more would now escape the same burden.

The threshold for couples has been increased by Alistair Darling, the Chancellor from 300,000 to 600,000.

Tax experts said that the Tories' plans would mean that all but a handful of extremely wealthy people would be taken out of the inheritance system altogether.

Land Registry figures show that fewer than 1,500 properties – or less than 0.15 per cent of the total– were sold for more than 2 million in 2007.

Chas Roy-Chowdhury, at the Association of Chartered Certified Accountants, said: "This is excellent news for many people who increasingly regard IHT as an unfair tax because it is a tax on assets that have usually been acquired out of taxed income."