Inheritance tax should not be considered a tax for the rich
Inheritance tax probably isn’t something that keeps most of the population awake at night. Many people may believe that they aren’t rich enough for them or their family to ever be affected by it. However, the frozen IHT threshold and increasing property value could see an increasing number of people facing an unexpected IHT bill.
HM Revenue & Customs (HMRC) revealed IHT receipts for the Financial Year 2021-2022 were greater than £6bn for the first time and up from £5.2bn in the previous 12 months.
With the inheritance tax nil band rate in the UK frozen at £325,000 until 2026, and the value of assets which form part of many estates rising, many more people who don’t consider themselves wealthy could be leaving a surprise inheritance tax problem behind.
Property prices have now reached almost £300,000 on average in the UK, an annual growth rate of 12 per cent by August. This means that property prices alone can take an estate up to or beyond the IHT threshold before any other assets are considered.
Other assets which make up the value of an estate include bank accounts, pensions, properties, jewellery, vehicles, shares, jointly owned assets, and pay-outs from insurance policies. It’s easy to see how the value of an estate can pass the IHT threshold.
The number of cohabiting couples continues to rise in the UK and is currently the fastest growing family type according to the ONS. This can create further IHT issues as these couples will not receive help from the higher IHT threshold of £650,000.
Heahter Pollard, Head of Underwriting at Tower Street Finance said: “People need to have a good look at their own, and their families, financial situation and consider what their families may have to face should the unthinkable happen.”
“An increasing number of people will be surprised about their own net worth in relation to the IHT threshold. Many people will be far wealthier in assets, than they think which could present IHT issues.”
“We help people every day who experience these problems and thankfully we can help them with our IHT Loan product.”
Find out more about our Inheritance Tax Loan product, or call us on 0343 504 7100.