Under the current system, inheritance tax of 40% is paid when someone’s estate – the total value of their money and property – exceeds £325,000. Anything under this amount is not taxed.
And, when a person dies, they can currently transfer this tax-free allowance to a surviving spouse or civil partner which increases the combined threshold for a couple to £650,000.
On top of this individuals can get an additional transferable allowance for a family home of £175,000 each when it is left to children or other direct descendants.
So at present most married couples can potentially leave £1m without paying inheritance tax.
The Conservative plan would increase the £325,000 threshold – the point at which you start paying the tax – to £500,000 and fully exempt a family home from inheritance tax.
At the moment an estate with a £2m house could be liable for £400,000 in inheritance tax. That would reduce to zero under the Conservatives.