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Chancellor to raise threshold

More families to be relieved of inheritance tax burden

George OsborneMore families will be given a tax break under plans by the Chancellor to raise the inheritance tax threshold to £1 million.

This will represent a further benefit for middle class families on top of  the Tories election pledge that properties worth up to £1m would be exempt.

In next week’s Budget George Osborne will announce an additional transferable allowance of £175,000 per person for main residences, taking the total inheritance tax threshold per individual to £500,000 and therefore up to £1m for couples.

The change will form part of an expected package of tax reforms, although he will commit the government to its promise not to raise income tax, VAT or national insurance contributions.

The relief on inheritance tax will be offset for by imposing higher taxes on pension savings of people earning more than £150,000 a year. The Tories pledged in their manifesto to reduce the current £40,000 tax free allowance to £10,000.

There has been speculation that he will cut the top rate of income tax from 45p to 40p but there will be few giveaways in a Budget that will focus on cutting £12 billion from the welfare bill.

Among the likely cuts are housing benefit for the under-25s and child tax credits for those with more than two children.

To show that he is also targeting the better off there will be further measures designed to tackle tax avoidance.

 

 

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