Inheritance, Property and the Cost of Living – How are People Being Impacted?

The UK is not the easiest place to live at the present moment. A cost-of-living crisis continues to heavily impact household budgets over a year on from its beginnings in the energy market, while property prices have only just begun to sink after three years of record growth – a fact rendered sinister by the relative stagnation of wages. But there is a secondary impact to the rise of property values, relating to inheritance tax.

Inheritance Tax

First, it is important to understand exactly how Inheritance Tax works as a mechanism. Inheritance Tax applies to the estate of an individual after their death. Generally speaking, it is a lump tax on the value of a deceased person’s total estate, prior to being divided between beneficiaries according to the particulars of their will. There are two distinct tax bands for Inheritance Tax: a nil-rate band for the first £325,000 of an estate’s value, and a 40% tax rate applicable to any additional value.

It is the executor of the will’s responsibility to pay the Inheritance Tax owed from the estate; that is, beneficiaries are not expected to handle the tax liability of their portion of the estate, as it is already deducted from the estate. In some cases, though, beneficiaries do inherit tax responsibility – typically if a valuable gift was given within seven years of the deceased’s passing.

Inflation and the Property Market

It is commonly the case that a deceased person’s most valuable asset is their home. Property is, overall, a stable investment – moreover, it is a strong choice for investment owing to its inflation-beating growth over time. House prices have been rising for decades, checked occasionally by market busts as in the 1990s.

Today, it is much harder for the average earner to afford property than it was in the 20th century. The cost-of-living crisis has had undeniable impacts on affordability for households and first-time buyers, making it difficult for many to get on the property ladder. But, more impactfully, high demand at the outset of the coronavirus pandemic in 2020 – supplemented by government interventions to remove Stamp Duty costs – caused a rampant rise in property values over a two-year period.

The Tax Threshold

But what does this have to do with inheritance? As outlined earlier, the threshold for Inheritance Tax liability is £325,000. This is a figure which has remained in place since April 2009, and which the government has committed to freezing until April 2028. According to the ONS, the average property value in England is £316,000 – a 14% rise on the previous year, and a rise which puts the average homeowner’s estate value above the Inheritance Tax threshold.

This has created an Inheritance Tax ‘net’ for middle earners. The executor of a given will is required to administrate the payment of an estate’s tax liability, a not-insignificant cost that many are unable to swallow ahead of probate being completed. As such, more executors are asking for an executor’s loan to offset the financial impact.

What Does the Future Hold?

The tax freeze indicates that there is little light at the end of the tunnel for middle earners, and that tax liability will continue to factor into a larger number of households. But house prices are also falling, after their precipitous rise was halted by hikes in interest rates towards the end of 2022. Tax liabilities may level out in the medium term, then, before the government sets a new threshold for Inheritance Tax.

Image: Inheritance tax by Nick Youngson CC BY-SA 3.0 Pix4free



Don’t join the u3a…

… if you’re expecting dull lectures and erudite trips. Because the u3a is far from being boring – it’s all about joining in and being part of an active community of like-minded people who want to share and develop their interests and skills.

Dorking & District u3a runs over 40 groups ranging from Badminton and Line Dancing to Photography, wine tasting and French lunches. All groups are run by members for members – no experts here, just a convivial atmosphere where everyone takes part in organising and running group activities.

Their guitar group started with just four members a couple of years ago but has since grown, meeting twice a month and showcasing their incredible skills. They have a very popular Singing for Pleasure group and an enthusiastic Ukulele group, both of which entertained members at our Christmas meeting. And their photography groups set themselves monthly challenges and showcase the best clips on their website.

Want to learn Bridge or other games? No problem – they have a group for you. Want to chill out then join the Tai Chi group that runs at Oddfellows Hall every week. Keeping fit with the Exercise for Health group not only helps you keep trim but dancing to music really gets the heart pumping.

They also organise events for the whole membership such as their very successful summer picnic at Buckland Lake Park and their days out and short trips are always fully booked. Last year they organised two trips – one to Devon and one to the Peak District. This spring they plan to explore Constable country and Suffolk including a trip on the river.

Monthly meetings enable people to meet informally, enjoy a cup of tea and a piece of cake while listening to well-known presenters on a wide range of subjects. Some of their talks are not for the faint hearted, covering such topics as Sex and Scandals at the Royal Court or Passports, Assassins, Traitors and Spies.

They don’t forget that some members join to meet others in a relaxed social atmosphere so the Vice Chairman organises regular lunches at a local pub or restaurant. And all are invited…

The Surrey Network also runs monthly study days so if you’re into archaeology or poetry or art, there’s a wide range of lectures you can choose to attend.

Intrigued? Check out the website www.dorkingu3a.org.uk or contact the membership Secretary John Sinclair on 01306 711542.



An update from the Surrey Hills SuperHeroes

A big shout of appreciation to all VantagePoint readers from Steve Markwell and Cathy Coleman (local writer and illustrator of the Surrey Hills SuperHeroes publication.) Thanks to you, the book is a sales success. Not quite as big as Harry’s effort, but our reviews are better!

Some updates readers may be interested in: –

  • A few of the stories and illustrations are featured on the new Surrey Hills National Landscape   website. Check them out on https://surreyhills.org/beinspired/youngexplorers/
  • On the back of the SuperHeroes success, a storytelling project is now under way with the Thames Basin Heaths Partnership. Watch this space.
  • There are a few copies of SuperHeroes still available from the first printing. Contact the author on stevemarkwell1l@gmail.com
  • The author also helps those who are interested in writing their own life story. It’s a great thing to do. Your life story is a lot less ordinary than you think. Just contact Steve on the email above for a chat. And Vantage Publishinbg can get copies printed for you!


Reindeer and Elves Raise Money for Hospice Care

Over £70,000 has been raised for local charity Phyllis Tuckwell, by schools in West Surrey and North-East Hampshire – as well as two children in Bermuda! The money was raised through Phyllis Tuckwell’s Reindeer and Elf Runs, which take place every year in the run-up to Christmas. In total, around 8,500 children from 41 different schools took part, wearing either reindeer antlers or an elf hat and ears, and running laps of their school playground or playing field. The children all loved taking part, and not even emigrating to Bermuda would stop Annabelle and Austin from joining in! They didn’t want to miss out on their school’s Reindeer Run, so donned their antlers and did the run on a beach in their new home!

All of the money raised by the Runs will go directly towards helping fund the supportive and end of life care which Phyllis Tuckwell provides for patients and families who are living with an advanced or terminal illness, such as cancer. Every day it cares for over 250 patients, relatives and carers – in their own homes or care homes, at the Hospice in Farnham and at the Beacon Centre in Guildford – but as the NHS/Government usually only covers about 20% of its costs, it has to raise over £25,000 a day to do this.

Before each school held its Run, a member of Phyllis Tuckwell’s Fundraising team attended an assembly there, to give a presentation to the staff and children about how the money they raised would help Phyllis Tuckwell and the people it cares for. On the day of the Run, a member of staff from Phyllis Tuckwell returned to cheer the children on, dressed festively as a reindeer, elf, snowman or even a Christmas pudding!

Phyllis Tuckwell is mindful of its impact on the environment and encouraged schools who had taken part in the Runs before to re-use antlers and elf hats which it had provided for them in previous years, or bring in their own festive headwear, through its ‘Bring your own from home’ initiative.

“We would like to say a massive thank you to all the pupils who took part in the Reindeer and Elf Runs, the teachers who arranged and organised the Runs, and everyone who sponsored the children,” said Charli Quay-Barnham, Community Fundraising Manger at Phyllis Tuckwell. “£70,000 is an absolutely amazing amount of money, and could pay for two of our In-Patient Unit nurses for over nine months. These nurses each care for up to five patients and offer emotional support to their families too.”

If you would like to find out more about raising money for Phyllis Tuckwell, please visit www.pth.org.uk/support-us/fundraising



Average cost of raising a child on the rise

The decision to start trying for children is a monumental one and there are countless factors to weigh up when planning a family.

Not least the fact that the average cost of raising a child is still on the rise, with increasing inflation attributed as a primary factor.

With nursery and childcare costs to weigh up, as well as the pressure of higher bills, there are many things to ponder.

Can you afford to have a child?

This is a question that many would-be parents face when deciding whether or not to try for a family.

In 2021, it was reported the basic cost of raising child up to the age of 18 was a little over £76,000 for a couple, while for a single-parent family the figure stood at £103,000.

Throw in the additional costs – such as childcare and housing – then the number climbs to £160,692 for a couple and £193,801 for lone parents.

It is important to have a strong understanding of your income and expenses when planning for a family.

Biggest costs when associated with raising a child

So, with the average cost of raising a child climbing, what are some of the biggest expenditures to consider?

It has been reported that childcare costs have grown at a rate four-times faster than a family’s wages since 2008, with approximately half of what families spend on children attributed to childcare costs.

But other areas are pricey too, such as education. There are books, stationary, and uniforms to think about, as well as money for school dinners or packed lunches and any additional equipment for sports or extracurricular activities.

Birthdays, spending money, and hobbies pinch the pockets, while it costs around £16,000 from 0-18 in buying clothes. Cribs and beds, prams, nappies and bottles contribute towards costs, while the increased use of technology – such as phones and iPads – add additional pressures.

Then there is the standard household spending, which on average is over £550 a week. Planning and sticking to a weekly budget is essential when trying to keep down the costs.

How to watch the costs

So, how can you save money and watch the outgoings when raising a family?

Well, first and foremost make sure you are regularly reviewing your budget but also that your budget is realistic for your household incomings.

Shop around for things like phone and internet providers, consider getting a water meter to reduce water costs, encourage those in the house to be energy savvy to reduce energy bills, and try batch cooking for lower outlay on meals.

Look around for deals and discounts, for instance did you know those in the health service can make the most of a Amazon NHS discount, consider using second-hand shops for clothing, and when it comes to Christmas and birthdays keep gift lists small and when possible set money aside to prepare for when the time comes.