Rising house prices over the last ten years have led to a fivefold increase in the number of homes liable to inheritance tax, according to research by Savills estate agency.

This is because the increase in the inheritance tax threshold, currently only £300,000, has failed to keep pace with the increases in the housing market.

The research shows that in 1996, 300,000 homes were potentially liable to inheritance tax. The number rose to 520,000 by 2001 and by last year it had jumped to 1.4million homes.

It means that hundreds of thousands of people who live in relatively modest homes may be surprised to learn that their estates will be subject to inheritance tax when they die. In some cases, their homes will have to be sold so their heirs can meet the tax liability.

In spite of this, many people have done nothing to reduce the amount that will be payable on their estates, even though there are several easy measures to explore.
 
Making a will and keeping it up to date is an important first step. It’s also worth considering the benefits of nil rate discretionary trusts which can greatly reduce tax liability to the benefit of your family. There are also various other reliefs and exemptions that enable people to give away some of their money without it later being subjected to inheritance tax.

Please contact us if you would like more details. We are happy to provide advice on all aspects of inheritance tax planning.