A recent report by the Taxpayers’ Alliance projects that the government will receive £5.35 billion in Inheritance Tax from grieving relatives in the 2019 to 2020 tax year. This is the highest amount of Inheritance Tax ever collected in by the government and it’s predicted to keep growing.
Inheritance Tax is only one part of a deceased person’s estate and is typically imposed when the value of the estate is above the £325,000 threshold, after deducting any liabilities, exemptions and reliefs.
Fewer than 5% of estates in the UK pay Inheritance Tax, therefore the average cost of death for homeowners in England comes to just £405. This value includes the cost of probate fees, land registration fees and death certificate costs but does not include other incurred expenses such as paying for the funeral. However, for a homeowner living in London, with no spouse or children and who purchases a coffin and is cremated, the cost of death could be as high as £60,773.
Paying for a funeral can be a substantial expense and the price has risen steeply over the last decade. It is now estimated that a funeral will cost £4,271 for people living in the UK but will vary depending on where you live in the country, any extra elements you wish to include, and whether you want a burial or cremation. For a burial, the average funeral cost comes to approximately £4,798 and for a cremation, the cost comes in lower at £3,744.
The report also highlights how the increase in house prices have had a significant effect on the cost of death. From 2009 to 2010, the average residential property price was just £164,159 for the whole of the UK and £265,249 for London. Almost 10 years later, from 2018 to 2019, the average house price increased dramatically to £229,075 in the UK and £475,297 in London. Although house prices have risen considerably, the Inheritance Tax threshold has remained at £325,000 since the 2009 to 2010 tax year. The frozen threshold means even more estates are bought into the Inheritance Tax net and as a result, the average Londoner might now expect to have property valued at £150,297 over the threshold. This would mean having to pay an Inheritance Tax bill of £60,119, on top of additional expenses.
The cost of death is not only a time-consuming burden but can also cause worry and stress to Executors and Administrators. Putting the estate in the hands of an expert like Kings Court Trust means that the legal and financial responsibility will be taken off your shoulders and the complicated matters after death will be taken care of, giving you the time to focus on life’s important moments.
At Kings Court Trust, we strive to keep you up-to-date with the latest news in the industry. If you have any questions about estate administration or handling Inheritance Tax, call our Client Services Team on 0300 303 9000 or click here to get in touch.