Since 2002 the number of homes valued above the IHT threshold, currently £255,000, rose nationally by 25 per cent to 1.9 million. In some regions the increase has been much higher, Northern Ireland saw the number double in just one year.
The lack of action by successive governments to link inheritance tax with house prices means the chancellor is benefiting from ever-increasing revenue from the housing market. With 74%* of homeowners with savings/investments saying that the equity in their home is their greatest asset (source: See Editor's Notes), BOSIS believes that homeowners should plan ahead and minimise the impact of IHT on their families.
Inheritance Tax
* Receipts from inheritance tax (residential property only) totalled £455m in 1992/93 and £880m in 2002/03.
* The inheritance tax threshold has increased 70 per cent from £150,000 in 1992/93 to £255,000 in 2003/04.
* During the same period house prices have increased 105 per cent.
* If the inheritance tax threshold had kept pace with house price inflation it would now stand at £358,500.
* The estimated number of properties now worth more than the Inheritance Tax threshold is four times greater than in 1997.
The dramatic increases in property prices, coupled with improved standards of living generally, mean that more and more people have assets that take them over the IHT threshold. The Revenue currently takes over £2.5 billion through Inheritance Tax alone. A properly drawn Will, together with professional tax advice are the key factors in ensuring that you don’t give the taxman any more than you have to.
Commenting Tom Woolgrove, head of customer management at BOSIS, said
"We pay more and more tax each year, whether it be direct or indirect, good tax planning can reduce that. The increase in house prices means that, for more and more people, their estate is likely to be subject to Inheritance Tax."
