More than one in four properties (26%) sold in England and Wales in the first seven months of 2016 exceed the inheritance tax ‘nil-rate band’ of £325,000.
According to research carried out by Saga Investment Services, this has increased from 24% of properties sold in 2015 exceeding £325,000, an increase from 13% in 2009 when the nil-rate band was first set.
Saga analysed (1) data in 105 postcode areas in England and Wales and found that the biggest areas for growth were predictably in London. In central London, four out of every five (82%) properties sold so far this year exceeded £325,000, up from 76% in 2015.
Almost all properties (95%) sold in the EC postcode area for more than £325,000, marginally up from 94% in 2015. North London has seen a bigger jump, from 76% to 83%, while South East London has increased from 63% to 71%.
In addition to this, almost two thirds of properties in outer London were sold for more than £325,000 in the first seven months of the year, up from 55% last year. In Twickenham, Kingston, Bromley and Harrow, more than 70% of properties sold exceeded £325,000.
For inner and outer London in total, almost three in every four properties sold (72%) in 2016 exceeded the IHT nil-rate band, compared to 65% in 2015, and 34% in 2009.
The rise in properties sold above the £325,000 ‘nil-rate’ band’ over the years
All of England and Wales
Year 2009 2010 2011 2012 2013 2014 2015 2016
Proportion 13% 17% 16% 17% 19% 21% 24% 26%
Central and outer London
Year 2009 2010 2011 2012 2013 2014 2015 2016
Proportion 34% 41% 42% 44% 49% 56% 65% 72%
Overall, there has been a small rise in the proportion of properties sold for more than £650,000 – the maximum that can be passed on by someone who inherits any unused IHT allowance from their spouse or civil partner. Some 5.8% of property sales exceeded £650,000, up marginally from 5.4% in 2015, and more than double the 2.4% of properties sold in 2009.
A third of properties (33%) sold in central London exceeded this amount, up from 30% last year. One in five properties across 11 postcode areas were sold for more than £650,000. This has risen from just three postcode areas in 2009.
Commenting on the findings, Gareth Shaw, head of consumer affairs at Saga Investment Services, said: “The latest figures suggest that 2016 will be a record year for property sales exceeding the IHT nil-rate band. And with more people dragged into the IHT net simply because their property has risen in value, the tax is no longer just an issue for the wealthy.”
The findings come six months before the government introduces a new inheritance tax allowance for people passing on their main home to a direct descendant.
