Posted by James McNeile, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
Growing number of homes fall into IHT trap
Almost a quarter of the homes which went under the hammer in 2015 were worth a sufficient amount to make the owner liable to pay Inheritance Tax (IHT).
According to the latest statistics, around 24 per cent of properties in the UK sold for more than £325,000 – the current threshold for paying the levy.
Back in 2009, a far smaller proportion of homes, around 13 per cent, was changing hands for more than this sum.
Given the spiralling cost of properties in London, the capital inevitably dominates the list of postcodes with the most number of properties worth more than £325,000.
Although, away from the South East, cities such as Bristol, Cambridge, Durham and Portsmouth are also reporting a sharp rise in the share of homes which would be hit with an IHT bill.
From next year, a more generous allowance will start to be phased in, with incremental changes to the current rules meaning that married couples and those in civil partnerships will (from April 2020) be able to pass on an estate of up to £1million to their “descendants” without being liable to pay IHT.
The Chancellor, George Osborne, has argued that the new regime will mean a significant reduction in the number of families who find themselves hit with the tax.
However, there are lingering concerns that the changes don’t go far enough, particularly with property prices continuing to expand.
Financial services expert Steve Wilkie described the new thresholds as “a plaster over a wound.”
For legal advice on Inheritance Tax (IHT) rules, please contact Tony Millson and Deanna Hurst in Royds’ Private Client team.