Towry sounds IHT warning

Published on

inheritance

Significant rises in the property market over recent years are pushing many people into larger inheritance tax bills, according to Towry, the wealth adviser.

The nil rate band – a personal tax-free allowance on the value of an estate – of £325,000 was introduced in 2009. It will remain frozen until 2019 despite the resurgence in property prices across the UK, and the Prime Minister’s calls for the rate to be raised to £1m. For a single person, any assets above this threshold may be taxed at 40% on death.

Initially the freeze on the nil rate band did not attract much attention as the average UK house price at the start of 2009 was £195,000 and falling. Five years on, the market has recovered and the average UK house price now stands at £253,000 – an increase of 30% on 2009. In London, the potential impact on an inheritance tax bill is even more marked with an average house price of £458,000.

With one in ten UK households sitting on assets totalling £1m or more, the freezing of the nil rate band will see more money finding its way to the taxman if people do not take action to mitigate their potential inheritance tax liability. From a base of 17,000 estates paying inheritance tax upon the owner’s death in 2010-11, the current freeze on the nil rate band could bring in an additional 5,000 estates per year who are liable to an inheritance tax bill.

Ian Dyall, estate planning spokesperson at Towry, said: “There are many steps that can be taken to mitigate your inheritance tax bill. The most extreme but obvious choice is to downsize your home, and then ‘gift’ the surplus money to children or grandchildren. Alternatively, you could choose to spend some of it yourself – it is there to be enjoyed.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Barclays latest lender to cut rates

Barclays is the latest lender to lower its mortgage rates, reducing selected residential products...

Landbay launches product transfer products

Buy-to-let lender, Landbay, has launched five new Product Transfer (PT) tracker products within its...

Brokers hesitant to recommend interest-only for FTBs, says Gen H

Nearly half of the UK’s top 100 first-time buyer brokerages wrote no interest-only business...

Coventry and Accord both cut BTL rates 

Coventry for Intermediaries and Accord Mortgages have both reduced rates across their buy-to-let ranges. Coventry’s...

UTB cuts rates by 1% and launches 95% LTV

United Trust Bank (UTB) Mortgages has reduced rates by up to 1% and launched...

Latest publication

Other news

Barclays latest lender to cut rates

Barclays is the latest lender to lower its mortgage rates, reducing selected residential products...

Landbay launches product transfer products

Buy-to-let lender, Landbay, has launched five new Product Transfer (PT) tracker products within its...

Brokers hesitant to recommend interest-only for FTBs, says Gen H

Nearly half of the UK’s top 100 first-time buyer brokerages wrote no interest-only business...