IHT ‘will impact on modest homes’

Rising property prices are the major reason that inheritance tax (IHT) is impacting upon consumers who would previously be exempt, according to one industry commentator.

Calculis, an independent financial adviser (IFA) specialising in personal planning tax services, states that even those with "modest" homes may find that their estates breach the £300,000 threshold above which IHT is levied at 40 per cent.

Alex Pegley, director of the firm, remarks: "The ones that I think will be increasingly caught are the ones with more modest homes, like three-bedroomed semis, because people with bigger homes come and see their IFA and he does some planning for them."

In contrast, those with more modest homes do not believe they will be affected, he suggested.

Mr Pegley added that civil partners and married couples can take steps to mitigate the impact of IHT if they seek appropriate financial advice.

Recent figures from the Halifax house price index suggest that the average house price in the UK is £196,525, while the average annual price increase stands at 10.7 per cent. When other assets are taken into account, many commentators have suggested that increasing numbers may find their estates overrunning the £300,000 threshold.