UK property prices have continued their upward trajectory into 2026, with the average house price reaching approximately £298,000. In London and the South East, averages exceed £500,000. This has significant implications for estate planning and Inheritance Tax.
With the IHT nil-rate band frozen at £325,000, a family home alone can now push an estate above the threshold. Add savings, pensions, and life insurance, and many families face a significant IHT bill.
The Residence Nil-Rate Band (RNRB) provides some relief, adding up to £175,000 to your threshold when leaving your home to direct descendants. For a married couple, this means a combined threshold of up to £1 million.
However, the RNRB is tapered for estates over £2 million, reducing by £1 for every £2 above the threshold. For high-value estates, the RNRB can be lost entirely.
Property Trusts can help protect your home's value for your family. By placing your share of the property into a Trust, you can ring-fence it from care fees, sideways disinheritance, and other risks.
Downsizing is another consideration. If you sell your home and buy a smaller property, you may retain the RNRB through the 'downsizing provisions', but this requires careful planning.
At Castle Family Legal, we help families across England and Wales navigate the impact of rising property prices on their estate plans. Contact us for a free, no-obligation consultation.
