Passing on your tax free allowance to your spouse
We know it’s not something you want to think about, but making sure you’re clear about what happens to any money left behind when your spouse passes away is vitally important; especially if you have children that you want to make sure are left financially independent.
So it’s useful to know that if the worst should happen then the un-used tax free allowance is transferred to the surviving partner. This means that when the surviving partner eventually passes away, their estate will only be taxed if the total amount is more than £650,000 (their own tax free allowance plus the already deceased partner’s).
It’s also worth knowing that from the 6 April 2017, every person will get a further £100,000 tax free allowance, this will increase to £175,000 by 2020-2021. However, this extra amount will only be applicable if the home is left to children or grandchildren. You can also pass this extra allowance on to your spouse so in theory a married couple could leave an estate to their children worth up to £1 million without being charged inheritance tax.