As the end of the Stamp Duty Land Tax (SDLT) exemption period comes to an end, as of the close of business on 30 June (much to the relief of conveyancers everywhere I am sure!), news today that UK house prices have increased over 13% in the last year might not be that much of a shock.
The SDLT exemption has certainly been an incentive for those 'thinking' about making a move, to actually 'make the move' and has placed pressure on chains to complete as swiftly as possible to take advantage of the deadline - no doubt there will be continuing incentive as the scheme wines down between 1 July and 30 September, albeit that the SDLT reductions are reduced - nevertheless, a saving is a saving! Whether the shift in market pricing is a permanent one remains to be seen.
But whilst considering the boom in prices, the changed demands of buyers and sellers and drivers behind sales and purchases including a desire for a different space or location as the future of work changes, it will be important for homeowners not to overlook the wider impact on their circumstances of inflation to house prices.
The home is often the largest asset someone has - and increased values and market demand is likely to push more peoples' estates beyond the inheritance tax nil-rate band - giving rise to increased Inheritance Tax being paid on death. Taking the opportunity to review Wills and tax planning of your estate and the potential impact of changes to the value of properties will be important for clients and advisers over the coming months - especially if the short term 'bounce' in prices sets the new baseline for house prices going forward.
Whilst tax planning with your main home is generally not appropriate (or indeed effective), there are options to consider for people's wider estates and an appropriately structured Will - especially one designed to protect all available inheritance tax reliefs including the Residential Nil Rate Band - could be invaluable in mitigating inheritance tax.
As ever, change is inevitable and in this case, it is market change leading the charge - but all change should be a prompt for a Will review and the consideration of a person's tax position. Even if they choose to do nothing, being informed of the options for later can bring enormous benefits for you and your clients.
If you would like to speak about how we can help you and your clients review their estate position and consider their tax planning, do get in touch.
UK house prices rose 13.4% in the year to June, the fastest pace since November 2004, the Nationwide has said. The building society said the average house price increased to £245,432 from £216,403 in June 2020. Nationwide chief economist Robert Gardner said prices were "close to a record high" in relation to average incomes, which he added "makes it even harder" for first-time buyers. He told the BBC the pandemic had "stimulated" the housing market. Mr Gardner said lots of people had "reassessed what they want from home" in terms of space and where they live as a result of the coronavirus lockdowns.