Reform UK led by Nigel Farage have set out sweeping plans to slash inheritance tax that aim to abolish the unpopular levy for all estates worth under £2million.
This means a couple with an estate worth £2million who are passing on a main residence would save £400,000, compared to current rates.
Reform UK is also planning to halve the tax rate for the current 40 percent to 20 percent with an “option to donate to charity instead”.
The party said this would mean some 98 percent of estates would be lifted out of paying the tax altogether.
There were rumours the Conservatives would scrap the tax during the previous Parliament and that they would announce this policy move in their manifesto launch today, but they have yet to back its removal.
A person has a standard nil-rate £325,000 allowance, rising to £500,000 if they pass on their main residence to an immediate relative.
This is effectively doubled for married couples or those in a civil partnership, as in this case one partner can pass on their allowances to their partner when they die.
A person will naturally reduce their liability as they use up their savings and pensions over the course of their retirement.
But a person can also reduce the inheritance tax bill for their descendants by giving away gifts.
An individual can give away up to £3,000 a year divided between any number of people.
They can also separately give away any number of gifts up to the value of £250, to different people.
Another opportunity to give away money as gifts is when a person gets married or enters a civil partnership.
An individual can give up to £5,000 to a child, £2,500 to a grandchild or great-grandchild or £1,000 to any other person.
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