Almost a quarter of homes sold for more than the Inheritance Tax (IHT) threshold last year, making their owners’ heirs liable to a 40% IHT bill. The number of sold properties valued above the £325,000 threshold increased to 24%, up from 13% in 2009.
Research by Saga Investment Services showed that despite overall property sales falling by 3.7% between 2014 and 2015, the sale of properties worth more than £325,000 soared by 11.4% over the same period.
Postcodes in London and the surrounding areas were the ‘hotspots’ where the highest proportion of homes sold for over the IHT threshold. However, 28% of postcode areas outside the capital have seen property sales exceeding the threshold double since 2009.
The current IHT threshold means that individuals pay tax on estates worth £325,000 or more. From next April, changes to the legislation mean that this allowance will be increased by an extra £100,000 per person, rising to £175,000 in 2020. This means that married couples and civil partners will be able to pass on £1 million to their beneficiaries without incurring inheritance tax charges.
Calculating IHT and other taxes can be a time consuming and complex process. Along with the general administration required when dealing with an estate, this adds yet another burden which the family is legally liable for.
We can provide support and advice on how to reduce the amount of IHT your estate will owe. Contact us for an informal discussion.