Budget's IHT bright spot

FIVE-MINUTE GUIDE TO... THE SEVEN-YEAR RULE ON INHERITANCE TAX

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RELIEF Rules on inheritance tax stay the same

LAST Wednesday's Budget was brutal for taxpayers but there was a rare positive as Labour Chancellor Rachel Reeves resisted the temptation to tighten the rules on inheritance tax (IHT), leaving the current system largely untouched.

The only blow for families is that the freeze on the £325,000 nil-rate band and £175,000 main residence band, which applies when passing on the family home to direct descendants, has been extended by an extra year, from 2030 to 2031.

That brings it into line with the freeze on income tax thresholds, which was extended by three years from 2028 to 2031.

That's a blow because inflation continues to erode their value, pushing more households into paying the 40% levy on estates as house and share values rise.

The nil-rate band hasn't been increased since April 2009. If it had kept pace with inflation, it would be worth more than £500,000 today, saving families up to £70,000 in IHT.