New rules allowing couples to combine their inheritance tax allowances will make it simpler for them to shelter up to £600,000 of assets from tax from now on – but it does not amount to a tax cut. The ‘nil-rate band’ for inheritance tax is already £300,000 per person. What the measures announced by Alistair Darling will do is bring together the existing allowances of married couples, civil partners, and widows and their late spouses. The chancellor also said he will increase these allowances to £350,000 per person, or £700,000 for a couple, by April 2010.

It was already possible for couples to combine their inheritance tax allowances in this way. But they could do so only by using a complicated will-and-trust arrangement. The first partner to die needed to have a will that would pass assets to the survivor up to the value of the nil-rate band, and then place the remaining assets in a trust. From today, trusts will not be needed to make full use of both allowances.