A growing number over-50s homeowners are more likely to downsize their home due to the freeze on inheritance tax brackets announced in the recent Autumn Budget, analysis from Regency Living has found.
Some 97% of over-50s are looking to reduce the amounts of inheritance tax they owe, while over a third (35%) are considering downsizing.
Inheritance tax will continue to be owed on estates worth over £325,000, or £500,000 for those leaving homes to their children, from now until 2030. They have stood at that level since 2009.
Tim Simmons, sales & marketing director at Regency Living, said: “However, the recent Autumn Budget has once again put a spotlight on inheritance tax and not only have we seen thresholds frozen until 2030, but we’ve also seen the housing market put in a very strong performance so far this year, so it’s understandable that many homeowners may now be more aware of their current position.
“Interestingly, whilst many plan to utilise existing loopholes that allow greater levels of tax relief when passing on an estate to a spouse or child, a greater number are taking a proactive approach by planning to downsize their property.”
Chancellor Rachel Reeves also announced that unused pension funds would be brought into the scope of inheritance tax from April 2027 which, in addition to the extended freeze, is likely to see more estates pulled into inheritance tax thresholds as asset values increase in line with inflation.
As it stands 43% are already liable to pay inheritance tax – but that will rise to nearly half (49%) once the value of the home and pension comes into account.
A number of over-50s are looking to leave their estate to someone else to pay less tax. Some 29% said they would leave their estate to their spouse, potentially doubling their spouse’s inheritance tax allowance to £650,000 in the process, whilst 26% said they would leave their estate to their children, meaning that their inheritance tax allowance would increase to £500,000.
