Soaring house prices in the West Midlands could see thousands of families hit with an unexpected bill as the increase pushes more homes into the inheritance tax bracket.
Analysis by KPMG based on house price indices from Nationwide and economic data from the Office for National Statistics analysis also revealed the West Midlands was set to show the second highest increase in house prices from 2018 to 2022 at 3.8 per cent.
He said: “IHT is a tax on the estate, including property, possessions and any money, of someone who has died. There is a standard IHT allowance over which an estate is subject to IHT.
“The current standard inheritance tax allowance, or nil rate band, is £325,000 per person – the current average price for a detached home in the West Midlands is £348,500.
“If a single person dies, their estate will only start to pay inheritance tax if it is valued over that standard allowance.
“Married couples can leave their beneficiaries up to £650,000 tax free. Where the first to die leaves their entire estate to their spouse, no tax is due. When the second spouse dies, they can transfer 100 per cent of the ‘unused’ allowance to their estate, but this will not apply to unmarried couples.”
Graham added that IHT is currently charged at 40 per cent of the value of the estate over the IHT allowance, but a new residence nil rate band was introduced last year, which can be claimed in specific circumstances.
“There are a number of qualifying factors to claim the residence nil rate band, and we’d recommend that people review their wills in the light of the changes.
“But people shouldn’t worry too much if they just tip over into the bracket for paying inheritance tax, they will only pay tax on the amount above the allowance, not the whole sum.”
“The amount of inheritance tax your beneficiaries pay can be reduced to 36% on some assets if you bequeath at least 10% of the net value of your estate to charity.
“Our advice would be to get expert advice if you’re worried about your estate being affected by IHT, there are a number of ways we can support families in structuring their estate planning to protect assets for their chosen beneficiaries.”
For more information on inheritance tax contact Graham Fuller on 01743 284149 or email firstname.lastname@example.org