IHT is charged at a rate of 40 per cent<\/a> on assets above the \u00a3325,000 nil-rate band, with an additional \u00a3175,000 allowance if the main residence is passed to direct descendants. <\/p>\nChanges in the autumn Budget also mean there will be up to 40 per cent IHT charged on unspent private pension pots from April 2027, which is expected to raise about \u00a31.5bn annually for the Treasury by 2029-30.<\/p>\n
Heather Powell, a partner at Blick Rothenberg, added: \u201cThe imposition of a selling tax, at a rate still to be set by the Government, is a massive disincentive for anyone looking to downsize, especially if they are managing their estate to ensure that they will not have a liability to IHT.<\/p>\n
\u201cWhy would parents volunteer to pay a property tax on the sale of their property, and reduce the legacy they leave their children?\u201d<\/p>\n
Experts have warned that as news of a new property tax is \u201cpure speculation\u201d at the moment, anyone in the process of buying or selling home shouldn\u2019t let it impact their current plans.<\/p>\n
Sarah Coles, personal finance expert at Hargreaves Lansdown, said: \u201cIf there was some kind of tax payable by the seller, then there is a risk that someone inheriting a property worth over \u00a3500,000 would need to pay IHT, plus whatever a theoretical new sales tax entailed. <\/p>\n
\u201cFortunately, there\u2019s a decent chance that they wouldn\u2019t have to pay IHT at all, because only a small fraction of people do.<\/p>\n
\u201cIf the person who died was the surviving member of a married couple, and the property was going to their children, they might have IHT nil rate bands of up to \u00a31m to protect them.<\/p>\n
\u201cWe know that inheritance tax is widely hated though, so there\u2019s every chance that another tax payable on the estate of someone who passed away might feel like it would add insult to injury.\u201d<\/p>\n
The new property tax would be part of a possible overhaul to stamp duty which is currently paid by those buying a new home.<\/p>\n
First time buyers have to pay it for a property valued at \u00a3300,000 whilst it is \u00a3125,000 for everyone else. Second home owners have to pay an additional 5 per cent.<\/p>\n
Tom Bill, head of UK residential research at Knight Frank, said: \u201cThe risk of such an approach is that it penalises individuals who are asset-rich but cash-poor, which is often the case when a person has lived in the same house for a long period of time. <\/p>\n
\u201cAn arbitrary cut-off of \u00a3500,000 also risks creating distortions in the property market like those we saw under the old slab stamp duty system.\u201d<\/p>\n
Stamp duty has been controversial, as critics say its existence can stop people from moving, and being able to access properties that are appropriate for them. <\/p>\n
Richard Donnell, executive director at Zoopla, said: \u201cThere are strong economic reasons for reform but there are political risks and the benefits of change can take time to become apparent. <\/p>\n
\u201cEveryone would welcome the removal of stamp duty, it is a hugely inefficient tax that acts as a major drag on the housing market, discouraging people from moving and downsizing. The challenge is that stamp duty raises significant money for the Treasury \u2013 \u00a310bn to \u00a312bn a year.<\/p>\n
\u201cReforms to council tax alongside a new tax on homes over \u00a3500,000 to replace stamp duty would replace the lost revenue by spreading the cost across more households. This would hit homeowners across southern England which has most higher value homes.\u201d<\/p>\n
\u201cThis would create a lot of short term disruption and uncertainty to the market with the risk of cliff edges appearing around any value thresholds. The longer term opportunity is to get more people moving home which will help support economic growth and labour mobility.\u201d<\/p>\n
The Treasury has been contacted for comment. <\/p>\n","protected":false},"excerpt":{"rendered":"A new property tax reportedly being considered by Rachel Reeves could charge families inheriting homes on top of…\n","protected":false},"author":3,"featured_media":160680,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[64,12748,255,10558,620,67,132,68],"class_list":{"0":"post-160679","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-inheritance-tax","10":"tag-personal-finance","11":"tag-property","12":"tag-tax","13":"tag-united-states","14":"tag-unitedstates","15":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115060263152529242","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/160679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=160679"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/160679\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/160680"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=160679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=160679"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=160679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}