Q&A In view of rising house prices, can I get extra Inheritance Tax allowance?

Q:      I was happy that my Will would be tax efficient for my family when I die, but with the massive rise in house values over the past couple of years I am wondering whether I need to reassess things. A friend of mine said he had heard there was a way to get an extra IHT allowance. What is the current threshold, and is there a way to get extra allowance?

A:       Firstly, it worth saying that everyone should regularly reassess and, if necessary, update their Will, as changes in legislation and personal circumstances can affect your wishes and intentions.

The rise in property values is a big consideration at the moment. Due to this and a freeze on the IHT threshold, it is predicted that families are set to pay out record amounts in inheritance tax this year. Certainly, the Treasury took £5.3billion in death duties in the nine months from April to December 2022, up by £700million on the same period in 2021.

Currently the first £325,000 of inheritance is tax free and IHT is payable at 40% on anything above that. As the threshold has not changed since 2009, the families of those people who have not reassessed their assets and the way they leave them in more recent times could be in for a nasty shock when they die.

Whilst the threshold has not changed, there have however been other changes to inheritance legislation, for example an additional IHT allowance of £175,000 when property is left to ‘direct descendants’ (children and grandchildren), and the transfer of unused nil rate band from one spouse to the other.

Fortunately, with some astute planning it is still possible to produce a Will that conforms to your wishes whilst also being tax efficient for your estate, so it is worth getting advice from an expert lawyer and updating your Will if you have not done so recently.

This question has been answered by Ulia Choudhry, a Solicitor with GHP Legal.  If you would like to speak to someone about this or any other legal matter it is still possible, and we are doing everything we can to ensure that we continue to offer our high levels of service to our clients.  Where possible, we ask that you communicate with us by phone or email. If you have a new enquiry or for an appointment visit www.ghplegal.com or contact one of our offices: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194 

Ulia Choudhry

Ulia Choudhry

Partner

Ulia is a Partner who specialises in Probate, Wills, Trusts and Tax and is based in Wrexham