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Local estate agent Aston Mead has welcomed today’s emergency budget announcement that inheritance tax on properties worth up to £1m is to be scrapped.

The Prime Minister David Cameron had tried to introduce the measure during the last government, but was thwarted by his Liberal Democrat coalition partners. Now, with a Conservative majority behind him, he is free to carry out the promise first made in 2008.

Responding to the announcement, Aston Mead Director Adam Hesse said: “This is excellent news – and something that all hard working families have been waiting for. A parents’ desire to pass on wealth to their children is a basic human and natural instinct. Now an incredible 94% of people are going to be taken out of this controversial tax altogether.”

Under the current system, individuals start paying the 40 per cent tax on properties worth over £325,000 for an individual or £650,000 for a couple who are married or in a civil partnership. From 2017, these thresholds will rise to £500,000 and £1m respectively.

There had been concerns that that such changes would act as a disincentive for elderly people in expensive homes to downsize. But the Chancellor has prevented that problem by allowing people who have owned valuable homes to defer their allowance until death, even if they moved out of the property concerned decades earlier.

Adam Hesse added: “The existing allowance was simply inadequate here in the South East, where house prices have increased substantially. Properties in Surrey and Berkshire often cost more than the threshold at which the 40 per cent tax charge was triggered. The new limit of £1m means that home-owners’ children will benefit, rather than the taxman.

“Our only complaint is that this proposal isn’t being brought into effect immediately. But after having to wait for seven years since it was first put forward, it will be worth waiting another 21 months or so for it to come into effect.”

 
 

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