He made the announcement during the first ‘pure’ Conservative Budget for nearly two decades.

The current rate of inheritance tax is 40% on anything above a threshold of £325,000 for an individual and £650,000 for married couples and civil partners.

By introducing a ‘family home allowance’ of £175,000 per person to allow parents to pass on their family home to children tax-free after their death, the government will increase the tax threshold to £1m on properties for married couples, and to £500,000 for individuals.

Osborne also confirmed that people who downsize to a smaller property will receive an ‘IHT credit’, essentially meaning they will still qualify for the new threshold.

How much IHT might you pay?

Hargreaves Lansdown has calculated how much inheritance tax you might pay on your estate based on the new thresholds.

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