South West-based chartered accountancy firm Milsted Langdon is reminding people of the importance of inheritance tax (IHT) planning following new figures showing that rising house prices contributed to families paying £3.1 billion in IHT over the last 12 months.
IHT is currently payable on estates worth more than £325,000, levied at 40 per cent on the balance above that threshold. The average detached house in the UK now costs £270,000, which makes up 83 per cent of the nil-band rate for IHT.
However, with the nil-band rate currently frozen until at least 2018 and house prices set to rise by around six per cent a year, it is likely that more families will be caught out by IHT in years to come.
Stephen Griffiths, partner at Milsted Langdon, said: “Planning for what will happen when you die is something few of us relish, but doing so now can save a lot of problems at what will already be a very stressful time for your loved ones, including saving some of the tax cost.
“There are a number of ways to legitimately mitigate your inheritance tax liability, such as annual gifts of up to £3,000 a year, and gifts made at least seven years before you die.
“For many people, IHT is something they think will never affect them, but as these figures show, there has never been a better time to start planning ahead.”