Richard Porter, Financial Adviser, Visionary Wealth Management said: ‘The Conservatives have promised to increase a couple’s inheritance tax threshold to £1,000,000 through the introduction of a ‘family home allowance,’ and this will benefit many families. However, the current proposals suggest that anyone with larger estates may not benefit from this proposal. It is also intended that this cost is covered by restricting tax relief on pension contributions for those earning over £150,000 p.a.’
Taxes
Before the General Election the Conservatives promised they would raise the personal allowance to £12,500, and increase the 40% tax threshold from £42,386 to £50,000. They also said they would not increase the current rate of VAT and National Insurance.
For married couples or anyone in a civil partnership the Conservatives also pledged to increase the inheritance tax threshold from £650,000 to £1,000,000. The Conservatives want to introduce a new ‘family home allowance’ worth £175,000 per person and this would be added to the existing £325,000 tax free allowance so the estates of individuals who die and leave assets, including a home worth under £500,000 could be charged no inheritance tax at all. The £500,000 tax free inheritance allowance would be transferable between couples. However, for anyone owning an estate over £2,000,000 the new family home allowance would be reduced and the owners of larger estates may not be entitled to it at all.
The Conservatives announced that any proposed changes to Inheritance Tax would be paid for by reducing tax relief on pension contributions for those earning over £150,000 a year.
Savings & Investments
The Government ‘Help to Buy ISA’ will go ahead in the Autumn, to help first time buyers save toward a deposit for their first home. There will be no minimum monthly deposit and for every £200 any first time buyer saves the Government will offer them an additional £50 of savings up to a maximum of £3,000. These will be available to any first time buyers purchasing homes up to £450,000 in London and up to £250,000 outside the capital.
Pensions
Ros Altmann has been appointed Pensions Minister, after Steve Webb lost his seat in the General Election. From July 2014 she worked as the government’s older worker’s business champion and was previously a director of SAGA.
The Conservatives have pledged to keep the pensions ‘triple lock’ so the state pension will increase annually by either average earnings, consumer price inflation or 2.5%, whichever is higher.