Your Home– A ticking inheritance tax timebomb
Eight Years until all Average UK Home Owners are Liable for IHT
New research from Stroud & Swindon Building Society reveals that in just eight years* house price increases could make the average UK homeowner liable for Inheritance tax (IHT). This shocking research from the UK’s 15th largest building society also showed that this problem would be faced much sooner by homeowners in Greater London (one year), the South East (four years) and East Anglia (six years) if house prices continued to increase at the current rate.
The Stroud & Swindon research also revealed that if the current average annual growth in the IHT threshold continued (3%), even regions with traditionally lower house prices would eventually be affected: Scotland (16 years), Northern Ireland (11 years) and the North West (12 years) (See table below).
| Region
|
Region Average Yearly House Price Growth*
(%)
|
Number of Years from end of Q2 2006 till House Prices hit IHT Threshold*
|
| United Kingdom |
9.5
|
8 years (Q2 2014)
|
| Greater London |
11.3
|
1 year (Q2 2007)
|
| South East |
10.2
|
4 years (Q2 2010)
|
| East Anglia |
11.4
|
6 years (Q2 2012)
|
| South West |
10.3
|
7 years (Q2 2013)
|
| East Midlands |
9.9
|
8 years (Q2 2014)
|
| Wales |
10.2
|
8 years (Q2 2014)
|
| West Midlands |
9.2
|
9 years (Q2 2015)
|
| Yorkshire & Humberside |
9.2
|
11 year (Q2 2017)
|
| North |
8.9
|
11 year (Q2 2017)
|
| North West |
9.5
|
11 year (Q2 2018)
|
| Northern Ireland |
9.3
|
11 year (Q2 2017)
|
| Scotland |
7.9
|
16 years (Q2 2022)
|
While the timeframe that this research reveals is concerning, it is likely that IHT will hit most households even earlier if they boast the average amount of savings (£17,271**) or have other taxable assets.
Paul Chafer, Sales Director from Stroud & Swindon Building Society comments:
“Many ordinary consumers still assume that they don’t have sufficient assets to be liable for inheritance tax. However, this research shows that in eight years if a person owns the average UK home, they are likely to be liable for inheritance tax at 40% of everything over the IHT threshold.
“This is potentially a huge amount and when consumers have already been paying tax on their income their whole lives, seems a completely unjustified penalty. Therefore, we actively encourage all homeowners to speak to an independent financial adviser to make sure that they are not leaving an unnecessarily high tax bill because they have not received guidance on this issue.”
For further information please contact:
David Greenleaf
Corporate Communications Manager
Stroud & Swindon
01453 768244
Lee Blackwell / Brian Thorn
The Wriglesworth Consultancy
020 7845 7900
Notes for Editors:
Research:
* = Methodology
- The average house price growth was determined using Halifax House Price Index Data from Q2 1996 to Q2 2006.
- The average IHT growth rate was determined using data supplied by the Inland Revenue Services (Q2 1996 to Q2 2006).
- This data was then applied to average regional house prices (Halifax House Price Index) and the results calculated.
- This calculation refers to homeowners who have paid of their mortgage or when their mortgage debt does not decrease the equity in the property sufficiently to bring it under the IHT threshold.
** = National Savings & Investments Spring Saving Survey – September 2006
About Stroud & Swindon Building Society:
Stroud & Swindon is the 15th largest building society in the UK with assets in excess of £2.5 billion. The Society operates through a dedicated team of intermediary business development managers, with a branch network of 22 offices in the South West, complemented by a direct call centre based in Stroud and website
www.stroudandswindon.co.uk.