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

Mortgage brokers remain central to borrower confidence despite market uncertainty

Mortgage brokers continue to play a pivotal role in helping borrowers navigate the housing...

Primis adds Uinsure sole-tie option to simplify general insurance process

Primis Mortgage Network has introduced a sole-tie option with Uinsure, giving adviser firms an...

HSBC to continue broker fraud prevention webinars in Q3

HSBC UK is extending its programme of fraud prevention webinars for mortgage intermediaries after...

Beverley BS reports rising demand for RIO mortgages

Beverley Building Society has reported a significant increase in demand for its Retirement Interest...

MorganAsh urges firms to improve Consumer Duty reporting ahead of FCA deadline

MorganAsh has warned financial services firms they need to strengthen how they evidence outcomes...

Latest publication

Other news

Mortgage brokers remain central to borrower confidence despite market uncertainty

Mortgage brokers continue to play a pivotal role in helping borrowers navigate the housing...

Primis adds Uinsure sole-tie option to simplify general insurance process

Primis Mortgage Network has introduced a sole-tie option with Uinsure, giving adviser firms an...

HSBC to continue broker fraud prevention webinars in Q3

HSBC UK is extending its programme of fraud prevention webinars for mortgage intermediaries after...