SKIING – Spending the Kids Inheritance
The number of estates to be caught by inheritance tax is set to double from 21,000 in 2012/13 to around 42,000 in 2016/17, according to reports.
Rising house prices, particularly in London and the South East, will mean that thousands of homeowners will become liable for IHT within the next six years.
IHT at 40% is charged on assets at death exceeding £325,000, although a transferable allowance for married couples and civil partners lifts the threshold to £650,000.
In 2007, then shadow chancellor George Osborne promised to increase the nil-rate band from its then threshold of £300,000 to £1 million, in a move which would ‘take the family home out of inheritance tax’.
However at the last Budget, George Osborne froze the threshold at its current limit until 2018.
Research by Grant Thornton, based on HM Revenue & Customs statistics and figures from estate agents Savills, showed that 5.5% of households were currently caught by IHT, but this figure was set to rise to 12% by 2018.
Savills’ figures suggest house prices will rise 25.2% by the end of 2018, meaning the IHT nil-rate band freeze will hit 176,000 over five years.
One way to get around this potential problem is to spend some of the wealth you have accrued, affectionately known as SKIING – Spending the Kids Inheritance. Alternatively for a proven and well thought out solution please speak to one of our Financial Advisers.