Live in Mole Valley, Surrey? You'll need to think about tax planning
According to latest figures by the Institute of Fiscal Studies (IFS), the Surrey town of Mole Valley has Britain's largest number of Inheritance Tax (IHT) liable estates per person. However, just two of the 50 highest paying areas are outside of the South Esat - so if you haven't already, now is the time to think about more effective tax planning.
Mole Valley: IHT capital of the UK
In the 2020 - 2021 tax year, there were 1396 estates in Mole Valley that were liable for IHT out of every 100,000 residents. The IFS says this is the largest total in proportion to the local population of any parliamentary constituency in the UK.
The top 5 areas were Mole Valley, Esher and Walton, Twickenham, Chichester and South West Surrey. Perhaps unsurprisingly all in areas in the South East of the UK.
In fact you have to look quite hard before finding an area that is outside of the South East.
Of the 50 constituencies covered by the IFS research, just two were outside the south of England that showed the largest proportion of IHT-liable estates Of the top 100, 38 were in the South East and 26 were in London.
What these figures show is that Inheritance Tax is no longer just something for the wealthy to concern themselves with. As it affects more and more people, it will soon become an increasingly important revenue stream for the Treasury - especially as the new Labour government looks to raise millions the public purse after inheriting finances that were the "worst since the second world war".
Despite previous calls to overhaul IHT, Labour has drawn up plans for increases in IHT and capital gains tax that could raise around £10m.
In a recent article in the Times, we heard from a couple, Mr and Mrs Holmes, who lived in Dorking, Surrey, who would be liable for an IHT bill of hundreds of thousands when they die - but they are trying to do all they can to pass on as much of it to their daughters as possible.
Mrs Holmes said "I've been working since I was 15, from 5 in the morning until 10 at night. I went straight back to work after having my daughters - I fought for that money. I have always worked so hard. I don't want to pay inheritance tax, it's wicked."
She no doubt speaks the minds of many who are considering how they can make sure their children are inheriting as much of their hard earned money as possible.
IHT is charged at 40% of the value of an estate above £325,000. If homes are being passed to children, there is an enhanced £175,000 Nil Rate Band on the value of the property, increasing an individuals' allowance to £500,000. If you're married or in a civil partnership, this doubles to £1m if combined with a spouse.
The average property price in Dorking is £616,203 so there's a chance you can still pass on your property free from IHT.
The looming budget could well make matters worse and make death a chargeable event for Capital Gains Tax (CGT) together with the real prospect of increases in the tax rates for both CGT and IHT.
Don't fall foul of any traps - we've written previous blog about trying to get around IHT laws only to find many people have trapped themselves or their children in a tax double whammy.
Talk to Downs Solicitors as we can offer the right advice for your situation.
