Published: 15/06/2023 By Hannah DuncanMany work all their lives to pay off their mortgage and have savings to live on when they retire, and perhaps a nest egg for loved ones. However, with property prices much higher than 10 years ago, especially in London and the Southeast, it's no wonder that Inheritance Tax (IHT) is no longer just for the super-rich!
According to the Office for National Statistics (ONS) figures, the average UK house price now sits at £285,009.
Inflation is also at an all-time high, but the IHT threshold has not risen in line with this and has instead stayed at £325,000 since 2009; it will remain at this amount until 2028. Meaning more and more estates are falling into the bracket to be subjected to Inheritance Tax (anything over £325,000 is charged at 40%). Last year HMRC raked in a whopping £7.1 billion worth of Inheritance Tax with £700,000 of it being received in March 2023 alone!
It's not only inflated house prices that are pushing many into the IHT threshold, but with a higher growth in investments and savings it's no wonder so many more estates are being subject to an IHT bill.
As well as the IHT being fixed until 2028 let's not forget the residence nil rate band (RNRB) currently at £175,000 which is also fixed until 2028. To understand more about IHT and RNRB please read our Wealth teams blog here
Finding that your estate may be subject to a 40% IHT bill can be a shock, but there are steps that you can take to ensure that your assets are managed as efficiently as possible to keep this tax to a minimum. Come and speak to one of our expert advisors, we can help to determine possible future exposure to Inheritance Tax and look to discuss potential IHT liabilities. Email us at firstname.lastname@example.org to arrange a meeting if this is of further interest to you.