Homeowners hit by inheritance tax

The number of UK homeowners hit by inheritance tax (IHT) is set to double over the next four years, and experts warn ignoring the problem could prove an expensive mistake.

With house prices steadily rising, many people will now be liable for thousands of pounds in IHT, even if they have never previously earned enough to pay higher-rate tax.

IHT is set at a fixed rate of 40 per cent on assets at death which exceed £325,000. In the last budget the IHT threshold was frozen until 2018, despite house prices rising at an average rate of 3.4 per cent a year.

Experts at Ludlow Wealth Management Group, have warned that ordinary families will be unwittingly caught by IHT if they do not consider an alternative approach.

David Hardman, director at Ludlow said: “Whilst there has been some relaxation in Inheritance Tax rules in recent years, many families are still unnecessarily caught by this tax.

“Even those who think they have fairly moderate wealth may still need to consider taking action, particularly if they own property and have savings and pensions as their estate could exceed the £325,000 threshold.

“Effective estate planning is becoming more important to decide how to leave assets to those who matter most to you in the most effective way.”

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