More people will fall into the inheritance tax (IHT) bracket now the threshold has been frozen for an additional three years from 2015.
While the move is planned with the laudable aim of funding the cost of care reform, it means many more individuals are likely to be landed with a charge when passing on their estate.
For many people a house is their largest asset. As the latest available Land Registry data shows, the average house prices in two regions are more than the £325,000 nil-rate band: Greater London (£371,223) and Windsor & Maidenhead (£337,235).
Based on a projection of a 3 per cent annual increase in average prices, by 2018 Surrey and Wokingham would also see average house prices valued at more than the IHT-free ban, with estimated averages of £362,634 and £333,630 respectively.
Rising house prices mean freezing the IHT threshold for an extended period will mean more people - including those who would not consider themselves wealthy - will leave estates that are caught by the tax.
The government’s announcement has sparked a debate that suggests more individuals will be looking to mitigate their IHT liability, with firms suggesting trust and business property relief-based ideas to reduce the bill.
aimee.steen@ft.com
