Inheritance tax payments on course for RECORD HIGH, new research suggests

Picture of the inheritance tax bill in the UKGETTY

Houses worth over £325,000 are taxed 40 per cent when the owner dies

If an estate’s value is over £325,000 then 40 per cent must be passed on to the taxman when the owner dies, though marriage doubles the threshold to £650,000.

Research by Saga Investment Services shows the proportion of houses sold in England and Wales above £325,000 is heading to a record high in 2016.

The study of 105 postcode areas in England and Wales showed that last year 24 per cent of houses sold exceeded this value.

But in the first seven months of 2016, that figure has edged up to 26 per cent, meaning more than one in four properties were sold over this nil-rate band.

The biggest areas for growth were predictably in London. 

In central London, 82 per cent of properties sold so far this year exceeded £325,000, up from 76 per cent in 2015. 

An elderly person signing their willGETTY

Being married doubles the threshold to £650,000

The tax is no longer just an issue for the wealthy

Gareth Shaw of Saga Investment Services

While north London has seen a bigger jump from 76 per cent to 83 per cent.

Away from London, St Albans in Herfordshire saw a huge jump from 62.7 per cent last year to 70.8 per cent so far this year.

Those paying more than £325,000 in Oxford also leapt from 42.1 per cent to 47.7 per cent from 2015 to 2016.

Rows of for sale and to let signsGETTY

82 per cent of properties sold this year exceed £325,000

Overall, there has been a small rise in the proportion of properties sold for more than £650,000. 

Some 5.8 per cent of property sales exceeded £650,000, up marginally from 5.4 per cent in 2015, and more than double the 2.4 per cent of properties sold in 2009.

A total of 33 per cent sold in central London exceeded this amount, up from 30 per cent last year. 

One in five properties across nine postcode areas were sold for more than £650,000.

This has risen from just three postcode areas in 2009. 

The only area not in Greater London was St Albans, which saw a rise from 18.6 per cent last year to 22.1 per cent this year.

The findings come six months before the Government introduces a new 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 without paying tax, if this includes their main residence.

A man with money bags next to a coffinGETTY

People are being dragged into higher inheritance tax brackets because their house value increased

This means a married couple 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 inheritance tax nil-rate band. 

“And with more people dragged into the inheritance tax 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.”

Daily Express :: Personal Finance Feed