Inheritance tax payments in the UK reach 35-year high

By Lenore Rice

A freeze on the inheritance tax threshold, coupled with the removal of some tax reliefs and rising property prices has resulted in the highest number of families in Northern Ireland and the rest of the UK having to pay the so-called 'death tax' in 35 years.

Approximately 40,100 estates are estimated to be liable for inheritance tax in the current tax year, expecting to rise to 45,100 in the following year. It is the largest number of families paying inheritance tax since the 1979-80 tax year when the threshold was £25,000. The threshold at which inheritance tax becomes payable on an estate has been frozen at £325,000 since 2009, which means that rising property prices in some parts of the UK have resulted in thousands of additional families facing a tax bill. A new relief in respect of the inheritance tax paid on a main residence family home is due to take effect in April 2017, and will rise in value so that by 2020 couples could jointly pass on a home with a value of up to £1million without the estate paying any inheritance tax.

Until such time as the 'main residence nil-rate band' is introduced, many more estates will be liable for inheritance tax, despite prime minister David Cameron having previously said that it should only apply to the "very wealthy".

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