Chancellor Jeremy Hunt has cut the standard inheritance tax from 40 per cent in good news for tens of thousands of families affected by the tax.
The rate will be cut to 20 per cent, which usually applies to parts of an estate above the £325,000 threshold.
The inheritance tax threshold has not risen since 2009, meaning more and more beneficiaries have been affected by the tax amid rising house prices.
If the threshold had increased in line with inflation, the inheritance tax nil rate band of £325,000 would have risen to almost £496,000, according to calculations by interactive investor.
People may be able to increase their threshold to £500,000 if they give their home to their children or grandchildren.
It may be possible to increase the threshold to up to £1million if a person is married or in a civil partnership.
Myron Jobson, senior personal finance analyst at interactive investor, said: “Inheritance tax has quickly shifted away from being a tax on the wealthy, as originally intended, to one paid by more modest estates thanks to runaway house prices and solid investment returns over the long term.”
