1 October 2004
Thousands of families in Tayside, Grampian and Fife are sitting on a tax bombshell simply because their home has increased in value, according to law firm, Thorntons.
The sustained growth in the property market in the east and north-east has meant that large numbers of middle income families have now crossed the Inheritance Tax threshold - once the sole preserve of landed gentry and the filthy rich.
Thorntons will stage a special seminar on Inheritance Tax in Dundee this week and admit to being taken aback by the response. The free event at Discovery Point was fully booked weeks ago, they have a waiting list of over 40 and are now making arrangements to organise a second seminar to meet public demand.
In the UK two and a half million houses with six million people living in them are already potentially liable to Inheritance Tax. With the current threshold set at £263,000 at which the 40% rate of tax kicks in, it's now thought an extra million people will become liable for Inheritance Tax this year simply because their property has increased in value.
Originally Inheritance Tax was designed as a means of taxing only the very well-off - but the rapid growth of property values means the tax now hits many middle income families. Nationally, it now nets the government £2.8 bn a year.
“Many more families are now finding themselves falling into a tax bracket which could mean that they will be liable for big payouts,” said Nick Barclay, Managing Partner at Thorntons.
"I think it's fair to say at Thorntons we would not normally expect to find any of our tax seminars selling out - but the response to this week's event is indicative of the way this tax has crept up on many families, in many cases purely by dint of an increase in the value of their home.
"Put very simply, if your home or property is likely to be worth £260,000 or more, you may have Inheritance Tax issues which should be addressed now.
“A lot of people are still unaware of the pitfalls of Inheritance Tax and should seek professional advice as soon as possible to find out whether they are eligible for current reliefs or exemptions.
"We hope this seminar will help highlight any potential problems and will offer suitable remedies, such as how a new will could save families more than £100,000 in the long run.”
In addition to the hurdles of Inheritance Tax, the family home will be put under the microscope by Thorntons partner, Sandy McDonald, asking whether it is an asset or tax headache, while solicitor, Claire Newton will be looking into powers of attorney and guardianships.
Thorntons is the largest law firm in Tayside, with over 280 staff, of which 25 are partners, and offices in Dundee, Arbroath, Forfar and Perth.
Thorntons first Inheritance Tax seminar takes place on Tuesday 26th October (5.30-7.30pm) at Discovery Point, Dundee. Over 150 people are expected to attend.