Budget 2007 Announcement: Inheritance Tax
Gordon Brown used his 11th and final budget speech today to announce surprise tax cuts that would see UK rates reduced to their lowest level for 75 years. He also announced plans to raise the Inheritance Tax Threshold (IHT) from £285,000 to £350,000 by 2010.
But what does this mean for first time buyers and younger groups trying to make their first step on to the property ladder?
Nicholas Leeming, director of propertyfinder.com comments:
For more of Gordon Brown's announcement, visit our special Budget 2007 section.A rise in the inheritance tax threshold to £350,000 by 2010 actually means more homes are likely to fall into the inheritance tax bracket, not fewer as the Chancellor suggested.
Since the threshold was last set at £285,000, house prices have already risen a little over 10%. To reach £350,000 in three years, they need rise at only 3.7% per annum, barely more than inflation. Even with this modest increase, 15% of homes will be worth this much in three years’ time. The burden will fall disproportionately on regions with the highest house prices – London and the South East.
High house prices are making it much harder for younger generations to get on the housing ladder. As the Chancellor takes housing wealth from older generations when they die, less money is available through inheritance to help the finances of the younger groups. First-time buyers will therefore suffer too.
Comments
Although I do not agree with the way Inheritance Tax is levied. I Also, do not agree that there is less money available to finance younger members of the family through Inheritance Tax. This will only be the case if the family fail to plan for Inheritance Tax.
If parents plan and put effective Wills in place they can ensure that NO INHERITANCE TAX is paid on sums up to �600,000 from April 2007 and �700,000 for people dieing after April 2011. We produce this type of will for as little as �750 and potentially save �120,000 in Inheritance Tax.
This should take the vast majority of people out of the Inheritance Tax Trap.
Even on larger estates effective planning can reduce or eliminate the Inheritance Tax Burden. We have worked on cases where the Inheritance Tax Liability would have been over £2m ad with advanced planning managed to completely eliminate this £2m tax bill.
It is harder to plan for Inheritance Tax if you are single, but again still not impossible.
If you want more detail please see our website www.nls-bucks.com, We have also produced an Guide to Reducing Your Inheritance Tax Liability which I will happily send anyone who contacts us. Our Telephone number is 0845-3700-240.
www.nls-bucks.com
Posted by: NLS Bucks | March 30, 2007 07:10 AM
I suppose Alistair Darling and Gordon Brown will now claim that the apparent re-adjustment of house prices since this last post will negate the need to raise the threshold for IHT. The argument is just as strong today as it was previously.
Posted by: Gordon | April 21, 2008 05:18 PM