April will mark one year since the new Inheritance Tax (IHT) allowances came into force, yet due to the complex nature of the IHT system, Matthew Billingsley from Hampshire law firm Moore Blatch is concerned thousands of homeowners are still not taking advantage of the benefits available to them.
With Hampshire properties having enjoyed significant rises in house prices, Moore Blatch is advising residents to review their wills to ensure they are benefiting from the new Residence Nil Rate Band (RNRB).
"We welcomed the increased IHT limit, not least as across Hampshire thousands of homeowners were finding themselves newly caught up in the IHT threshold," explained Matthew Billingsley, a solicitor specialising in wills, tax and trusts.
"This is especially true for residents of Winchester and Lymington where average house prices have dramatically increased. Southampton has also seen property prices increasing by approximately 12% since 2015, meaning hundreds more residents may face unanticipated IHT charges on their death."
Chancellor Philip Hammond has ordered a sweeping review of the IHT system, but until any changes come into force, Billingsley thinks residents should still check their wills. "As the RNRB tax relief needs to be properly considered in light of the complications that entail if wills (homemade wills especially) are not properly reviewed, the potential issues could be rife. For example, if someone plans to sell their home and downsize to a less valuable house, if professional advice has not been obtained tax relief could well be lost."
"Reviewing a will may sound like a time-consuming process, but it is absolutely worth it, considering the thousands of pounds that could potentially be saved in the future."
Previously, an individual had an IHT exemption of £325,000. From April last year, individuals could claim an extra £100,000 on top of this if they qualified for the RNRB. In April this year, the RNRB allowance increases by £25,000, and will continue to increase by £25,000 annually rising to an additional £175,000 by 2020.