The Effect Of Increased House Price On Inheritance Tax
The boom in house prices across the UK and particularly in London may be making many home-owners feel better about their growing wealth. With the value of the average London home set to breach the inheritance tax threshold of £325,000 next year and homes in the South East likely to follow suit by 2019, many people will become higher rate taxpayers for the first time on their death.Irrespective of other assets UK, home-owner can expect to see their homes exceed the current IHT threshold by 2025. The price of the typical property in London will reach £331,000 in 2015 and homes in the South East will cost £239,575 triggering the tax bills, according to new analysis.The findings come as average residential property prices continue to rise while the IHT threshold remains fixed for the sixth straight year at £325,000. Since 1986, the IHT threshold has risen by an average of 5.4 per cent a year, but has remained at £325,000 since the 2010/11 tax year and will be frozen at this rate until at least April 2019.However, house prices have risen by 7.5 per cent across the UK and by 15.4 per cent in London. If IHT thresholds had continued to rise in line with its historic average it would currently be £401,442 in 2013/14 rising to £423,212 in 2014/15.There are now more property millionaires in the UK than ever before, and current economic conditions have created a situation for massively rising house prices. This increase will deal their owners a severe blow if they have not planned ahead to save their families from this punitive tax. Inheritance tax can significantly reduce the value of an estate, so it is vital to take evasive action as early as possible.The typical age for people arranging IHT strategies in around 70, but research suggests that age tag is now going down as more and more people find themselves likely to be affected by this punitive tax.”As always with any complex tax planning experienced advice is essential so please call us today.