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

Bruton Knowles launches land referencing application after six-figure investment

Bruton Knowles has launched a land referencing application designed to reduce the time required...

World Cup, heatwaves and politics cool housing market

Political uncertainty, higher mortgage rates and a summer dominated by holidays, heatwaves and the...

Second charge mortgage lending volumes dip for first time in more than a year

New business volumes in the second charge mortgage market fell by 1% in May,...

Building Societies Association signs Mortgage Industry Mental Health Charter

The Building Societies Association has become the latest organisation to sign the Mortgage Industry...

Sprive urges first-time buyers to plan ahead as Leeds launches 2% deposit mortgage

Sprive has welcomed Leeds Building Society's new 98% loan-to-value mortgage but says borrowers should...

Latest publication

Other news

Bruton Knowles launches land referencing application after six-figure investment

Bruton Knowles has launched a land referencing application designed to reduce the time required...

Why post-contract variation is becoming the mortgage market’s next battleground

For much of the past decade, mortgage technology investment has focused on origination and...

World Cup, heatwaves and politics cool housing market

Political uncertainty, higher mortgage rates and a summer dominated by holidays, heatwaves and the...