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

How small and medium-sized lenders can fix the origination headache

We are constantly told that to fix the mortgage journey, we need to rip...

Halifax Intermediaries to rebrand as Lloyds Intermediaries

Halifax Intermediaries will rebrand to Lloyds Intermediaries in early 2027. The lender said there will...

OMS secures two CRM contract renewals

One Mortgage System (OMS), the CRM and loan origination platform for intermediaries and lenders,...

Barclays cuts mortgage rates

Barclays is reducing rates across its range of residential purchase, remortgage and existing customer...

CHL Mortgages launches light refurbishment BTL range

The new range is aimed at landlords looking to carry out non-structural or modernisation...

Latest publication

Other news

How small and medium-sized lenders can fix the origination headache

We are constantly told that to fix the mortgage journey, we need to rip...

Halifax Intermediaries to rebrand as Lloyds Intermediaries

Halifax Intermediaries will rebrand to Lloyds Intermediaries in early 2027. The lender said there will...

OMS secures two CRM contract renewals

One Mortgage System (OMS), the CRM and loan origination platform for intermediaries and lenders,...