Significant rises in the property market over recent years are pushing many families into larger inheritance tax bills, according to Towry, the wealth adviser.
The nil rate band of £325,000 was introduced in 2009 and is expected to remain frozen until 2019. For a single person, any assets above this threshold may be taxed at 40% on death.
Initially the freeze on the nil rate band did not attract much attention, as the average UK house price at the start of 2009 was £195,000 and falling. Five years on, the market has recovered and the average UK house price now stands at £253,000 – an increase of 30% on 2009. In London, the potential impact on an inheritance tax bill is even more marked, with an average house price of £458,000.
With one in ten UK households sitting on assets totalling £1 million or more, the freezing of the nil rate band will see more money finding its way to the taxman if people do not take action to mitigate their potential inheritance tax liability, says Towry.
“Estate planning is a complex area and the solutions will be different for every individual or household,” explained Ian Dyall of Towry. “Therefore, it is important to seek expert advice in order to identify the best financial path for you and your family.”
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