Friends Provident has recently warned of the increasing number of homeowners that will face an inheritance tax bill on death. The reason for the increase is due to the rise in house prices over the last few years.
Since 1992, Friends Provident claims that house prices have risen by 139%. This contrasts with the rise in the limit where no inheritance tax is paid over the same period of only 75%.
According to a survey done by Halifax, 2.4 million people now face inheritance tax bills.
Our View
It is true that house prices have far outstripped inflation and this is why more people will be liable to inheritance tax. The inheritance tax threshold generally only rises with inflationary increases, although the Government do not have to increase it each year.
There are many ways to legitimately avoid inheritance tax and the earlier you start, the better.
Not all involves you giving money away. The inheritance tax threshold at the moment is £263,000. If everything you own is in excess of that amount, a tax bill of 40% will be landed on your beneficiaries upon your death.
Learn more about Inheritance Tax in our website Inheritance Adviser.com.