The Conservative Party outlined plans for a new transferrable main residence allowance in its election manifesto earlier this year. The move, expected to be announced by George Osborne in his Budget speech on Wednesday, would increase the effective inheritance tax threshold for married couples and civil partners to £1 million.
Analysis of Land Registry data by NFU Mutual has identified inheritance tax hotspots in England and Wales where homes are worth more than the proposed £1m cap.
A rush for market valuations could bring peace of mind for those with tax concerns but may leave looming insurance problems for up to a third of families living in high-value or listed homes which are more expensive to repair or rebuild.
Nicki Whittaker, high-value home specialist at NFU Mutual, said:
“If you don’t know how much your home is worth, then there’s a real danger that you and your family could lose out. Around three in every ten homes are undervalued by their owners, leaving families at risk of underinsurance and an unexpected tax bill.”
Around 80% of million pound homes sold in England and Wales in the last 15 years are in London and the South East, but there are concentrations of expensive homes across the rest of the country, including areas of Gloucestershire, Cheshire and Dorset.
Nicki continued:
“We expect there will be a rush to re-value these properties as parents and grandparents look to hand down as much as they can to their families.
“But many of these bespoke and listed properties need more thorough assessment to establish their true worth.
“Figures from our valuation partners show many expensive country homes are dramatically undervalued because owners are often unaware that the cost of rebuilding listed and unique properties is so much greater.
“It’s clear from these results that thousands more people need to take action if they want to make sure their biggest financial asset remains in the family. A valuation and some simple tax planning would help to make sure people are fully protecting what is rightfully theirs.”
