Yesterday it was announced that the Inheritance Tax threshold will be frozen until 2019.
The Conservative leadership has been sharply criticised for breaking a flagship promise made, while in opposition, to raise the threshold to £1 million.
Instead, the threshold will be frozen at £325,000, pulling yet more people into the tax net.
The money raised from the tax will be used to fund the Government’s reforms to the elderly care system.
What is Inheritance tax?
Inheritance Tax is usually paid on an estate when somebody dies. It’s also sometimes payable on trusts or gifts made during someone’s lifetime. Most estates don’t have to pay Inheritance Tax because they’re valued at less than the threshold (£325,000 in 2012-13).
The tax is payable at 40 per cent on the amount over this threshold or 36 per cent if the estate qualifies for a reduced rate as a result of a charitable donation.