House prices trigger inheritance tax warning from expert

A financial adviser has warned that more homes are being ‘caught’ by inheritance tax due to rising house prices.

The current inheritance tax (IHT) threshold – (or ‘nil rate band’) which is the amount up to which an estate will have no IHT to pay – is £325,000.

A study of property sales conducted by estate agent Savills for The Sunday Times has shown that the number of sales of properties worth more than this threshold have increased from 13.5 per cent five years ago to around 20 per cent in 2013.

Now Jon Whitmarsh of Ludlow Wealth Management Group has warned that many individuals may get caught out by a tax that they thought only applied to the wealthy.

He said: “When you die, your assets, including cash, investments and property, are left in your estate. If your estate is valued above £325,000 (£650,000 for married couples) then the excess is liable to IHT at 40 per cent.

“Properties often make up the largest part of an estate and with more being valued above the current threshold, many individuals are leaving themselves, or rather their loved-ones, exposed to a potential IHT liability.”

The IHT threshold has not been changed by the Government since 2009, and has been officially frozen until at least 2017/2018. Within that time it is expected that property values will continue to rise and therefore IHT will affect a greater number of people.

Jon added: “If your property is worth more than the current threshold it is important to seek the correct advice to look at ways to mitigate the impacts of IHT.”

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