As the main parties set out their election manifestos, we examine their pledges. Re IHT:
The Tories: Their big ticket policy is the pledge to take the family home out of reach of IHT. Currently each individual has a personal IHT allowance of £325,000, amounting to a combined allowance of £650,000 for spouses. IHT of 40% applies to the value of estates above this amount. David Cameron wants to create an extra tax-free band worth £175,000, a combined £350,000 for spouses, which would apply to main residences. This would bring the total nil-rate band available on a property to £1 million.
The Labour party has been strangely quiet on this front, with no mention of IHT in its manifesto. A spokesman said it would outline plans in its first Budget, if elected.
Likewise the Liberal Democrats have made no mention of IHT in their manifesto, but having blocked Tory plans to raise the nil-rate band to £1m while in coalition, it is fairly clear where the party stands.
Ukip has proposed to abolish IHT by 2020. It has estimated this would cost £5.5 billion in 2020 but has not explained how it would be funded.
Rivalling Ukip in its radicalism, the Greens have set out plans to 'fundamentally reform IHT and turn it into an accessions tax'. Under the party's plans the level of IHT paid would depend on the wealth of the recipient, not the donor and bequests to individual recipients who have less than £200,000 would be tax free.
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