11th May 2015
The Conservative victory in the General Election will reduce the pressure on elderly owners of higher-value property to downsize, claims private client law firm Wilsons.
The group asserted that the Tories’ plan to create a £175,000 transferable allowance for Inheritance Tax (IHT) means that the threshold for payment of IHT by the estate of a married couple will reach £1m provided the new Government keeps its pledge.
As a result, this could exclude a substantially larger number of higher value residential properties from IHT. The firm believes it is likely that around 20,000 fewer estates will pay IHT by the end of this Parliament in 2020, marking a fall of over 20%.
Previously an increasing number of elderly homeowners were downsizing into smaller properties so that they could reduce their estate’s future IHT bill.
Labour had promised to introduce a ‘Mansion Tax’ – an annual charge on owners of properties worth more than £2m and in some cases, this would also have been added to Inheritance Tax if the owner could not afford the charge. Wilsons said that many were expected to downsize to a lower value property not caught by the mansion tax.
Rupert Wilkinson, partner in Wilsons’ Private Client team, said: “Many elderly couples with properties worth upwards of the current threshold of £650,000 had to consider selling their houses and giving away money to avoid their estates having to pay the 40% IHT rate. A lot of them will now be delighted at the prospect of their estates being free of Inheritance Tax .
“With the threat of a Mansion Tax all but disappearing, a lot of elderly homeowners will come out of this election with their property wealth more secure.”