A quarter of homes sold this year bust inheritance tax
More than one in four properties sold so far in 2016 exceed the Inheritance Tax ‘nil-rate band’ of £325,000, according to Saga Investment Services. And in London the figure is much higher.
In analysis of property sales data from the Land Registry for the first seven months of 2016, 26%, more than one in four properties in England and Wales, were sold over the nil-rate band.
In central London, this figure rose to four out of every five (82%) properties, up from 76% in 2015.
Almost all properties (95%) sold in the EC postcode area for more than £325,000, marginally up from 94% in 2015. North London has seen a bigger jump, from 76% to 83%, while South East London has increased from 63% to 71%.
In addition, almost two thirds of properties in outer London were sold for more than £325,000 in the first seven months of the year, up from 55% last year.
For inner and outer London in total, almost three in every four properties sold (72%) in 2016 exceeded the IHT nil-rate band, compared to 65% in 2015, and 34% in 2009.
The findings come six months before the government introduces a new IHT allowance for people passing on their main home to a direct descendant. In 2017, an individual will be able to pass on £425,000 to their heirs, if this includes their main residence, meaning a married couple or civil partnership could pass on as much as £850,000.
Gareth Shaw, head of consumer affairs at Saga Investment Services, said: “The latest figures suggest that 2016 will be a record year for property sales exceeding the IHT nil-rate band. And with more people dragged into the IHT net simply because their property has risen in value, the tax is no longer just an issue for the wealthy.
“The main residence allowance will give this group of people in a property hotspot some welcome relief, but the rule will introduce more complexity to the already-confusing UK tax landscape. For anyone who believes their estate may be subject to IHT, early action with a professional financial planner will be a valuable investment.”