Because house prices generally are increasing, the stationary Inheritance Tax (IHT) threshold has meant that many homeowners are likely to face higher IHT bills in the event of their death.
The government recognises this and has taken steps to address the issue by introducing a new form of tax relief to be applied to main residences. This is called the Main Residence Nil-Rate Band which is applied to a home inherited following a death. It is being introduced on a sliding scale from April 2017 onwards.
From an initial benefit of £100,000, it will increase to £175,000 per person by 2020-21.
So, how will this impact you and what taxes will you be liable to pay in the meantime? Ensuring that you know the answers to these questions is essential to remaining as tax-efficient as possible.
As the article below suggests, following the changes, financial advisers may begin to see more demand for their expert help. We are hosting a series of IHT seminars across the UK to help start the education process and bring to life the different issues people can face when planning what they will leave behind.
The senior manager for business development at the Oxford-based tax efficient investment company, said more and more families are going to be caught by inheritance tax because of rising asset prices. He said: “If you are a home-owner and you own an average detached house, that is going to absorb the nil rate band. If you have assets above your main residence, then you have got an inheritance tax problem.”