£3bn extra inheritance tax

Hidden away in the small print of the Autumn Statement last week was a forecast that families will pay an additional £3bn in inheritance tax by 2018.

Since the last set of figures were published by the Treasury in March, the amount expected to be collected in inheritance tax between 2013/14 and 2017/18 has risen from £18.4bn to £21.4bn.

Rising house prices is one reason for his expected increase.

House prices are expected by the government to rise by 5.2% in 2014/15 and 7.2% in 2015/16, resulting in more estates paying the death tax and those that already exceed the nil rate band paying more inheritance tax.

By 2017/18, the average house price is predicted by the government to be 24% higher.

Because the government plans to freeze the inheritance tax nil rate band until 2018, price inflation will result in more families paying more inheritance tax.

Inheritance tax is a largely voluntary tax; it is possible to reduce or remove the liability for your beneficiaries through various planning and gifting strategies.

There is however a balance to find between control and effectiveness.

The most effective inheritance tax planning requires giving up total control of your assets.

Retaining control and keeping access to your wealth reduces the amount of assets removed from your taxable estate.

Do get in touch if you have any questions about inheritance tax, how much your family will pay and what steps you can take today to reduce this future liability.