A record proportion of properties sold in 2016 to date exceeded the inheritance tax (IHT) nil-rate band limit of £325,000, according to research by Saga Investment Services.
26% of property sales this year were above the threshold, an increase from 24% in 2015 and 13% in 2009.
- two thirds of properties in outer London were sold for more than £325,000 in the first 7 years of 2016, up from 55% in 2015.
- inner and outer London in total saw 72% of properties sold in 2016, compare to 65% in 2015 and 34% in 2009
- properties sold exceeding £650,000 rose by 5.8%, up from 5.4% in 2015 and more than double of sales made in 2009 (2.4%).
A new main residence nil-rate band is due to come into force from 6 April 2017 for people passing on their main home to a direct descendent.
The allowance will be £100,000 in 2017/18 and will rise each year until it reaches £175,000 in 2020/21.
Gareth Shaw, head of consumer affairs at Saga Investment Services, said:
“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.
“For anyone who believes their estate may be subject to IHT, early action with a professional financial planner will be a valuable investment.”