LONDON — The UK government is preparing to raise the threshold for inheritance tax, keeping one of the Conservatives' key election promises.
The move will be announced on Wednesday when Chancellor of the Exchequer George Osborne presents his budget, officials say.
The change will honour a promise made before the May election to exempt homes worth as much as 1 million pounds (US$1.6 million) from inheritance tax bracket and will take effect in April 2017. The current threshold is 650,000 pounds.
It will also apply to people who sell their home or buy a smaller home before that date, so more can benefit from the change, according to a Conservative Party official who asked not to be identified.
"We’ll take the family home out of inheritance tax for all but the richest, and it’s a promise we will keep," Prime Minister David Cameron and Obsorne wrote in an opinion piece published on Saturday in The Times.
They said they would pay for the measure by limiting pension-tax relief to those earning more than 150,000 pounds.
Osborne on Wednesday will deliver his first budget as chancellor in a majority Tory government, buoyed by a recovering economy and a weakened Labour opposition. His attempt to raise the inheritance tax threshold in the last parliament was blocked by his Liberal Democrat coalition partners at the time.
The increase in the threshold, as set out by Cameron in April, will be achieved by raising the current limit of 650,000 pounds for a couple with an additional 175,000-pound allowance for each partner when passing on their primary residence.