TaxPersonal Tax#SummerBudget: Chancellor to restrict tax credits as he raises IHT threshold

#SummerBudget: Chancellor to restrict tax credits as he raises IHT threshold

Tax credits for families with more than two children will see their tax credits limited as the IHT threshold set to rise

#SummerBudget: Chancellor to restrict tax credits as he raises IHT threshold

MEASURES restricting tax credits for families with more than two children are expected to be introduced by the chancellor in today’s Emergency Budget, alongside an increase in the inheritance tax threshold to £1m for married couples by 2017.

In the first all-Conservative Budget since 1996, George Osborne will announce a rise in the personal allowance – which currently stands at £10,600 – while the threshold for the 40p tax rate will also be raised.

On the inheritance tax threshold, PM David Cameron and Osborne wrote in The Times those who worked for their homes should be able to pass them on to family members.

The policy is likely to be funded through capping of tax relief on pension contributions given to those earning more than £150,000 a year, the BBC reports.

At present, inheritance tax is payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.

It is thought that the restrictions on child tax credits – which would apply to new families entering the system – would save the Treasury £1.4bn as the government aims to end “the ridiculous merry-go-round” of taxing low-income earners only to return much of it to them in the form of tax credits.

There will also be a ‘triple-lock‘, where rates and some thresholds will be set for income tax, NIC and VAT, while avoiders and evaders can expect further moves to make their lives more difficult as the government seeks to gain £5bn a year from pursuing tax cheats.

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