The last few years have seen a boom in the property market, with house prices rising steadily across the UK. That, coupled with rising inflation, has pushed up the value of estates, meaning more money for the taxman when you pass away.

House prices here in Dumfries and Galloway have risen by almost 11% in the last 12 months, and the buoyant market isn’t showing any signs of slowing yet. With inflation at its highest level since 1981 the value of other assets continues to rise, raising estates that would have previously been under the threshold to taxable levels.

Worse still, the amount you can pass on to your beneficiaries tax-free (known as the Nil Rate Band) hasn’t risen since 2010 and remains frozen at £325,000. Inheritance tax is charged at 40% on everything above that figure.

But it isn’t all bad news. Inheritance Tax is still a largely discretionary tax, and if you put your financial affairs in order you can ensure that your beneficiaries will receive your estate in the most tax efficient way possible.

Simple steps you can take to mitigate inheritance tax include making a Will, gifting, putting money in trust or tax-efficient investments, and considering the order in which you access your assets during your retirement.

Partner Shannon Gibson regularly advises clients in respect of succession and tax planning. She explains: “Once viewed as a tax only for the very wealthy, the reality is that the average property price in the UK is now only £50k short of the Nil Rate Band. Thankfully, there are a lot of things we can do to minimise exposure to Inheritance Tax and make use of all available reliefs.

Inheritance Tax planning doesn’t have to be complicated or expensive either – just making a basic Will in favour of your spouse and your children can allow you to pass on up to £1 million tax-free, including the family home.”

If you’d like to discuss Inheritance Tax planning and whether rising house prices mean it would be valuable for you to consider, please get in touch.

Shannon Gibson is a Partner in our private client department. She advises our clients in relation to all aspects of estate planning and administration, including succession planning, tax, asset protection and contentious trusts and estates.