2.1m properties face inheritance tax
There has been a three-fold rise in the number of properties above the inheritance tax threshold in the past five years, the Halifax bank has said.
Their research shows that 2.1 million UK households or 12 per cent of all owner-occupied properties now see the value of their home above the inheritance tax threshold (£275,000) compared to 800,000 households just five years ago.
In one in ten local authorities the average house price is above the threshold.
At the moment, people have to pay tax at a 40 per cent rate on inherited assets worth more than £275,000. That threshold is scheduled to rise to £300,000 in the tax year 2007/08.
However Martin Ellis, the chief economist at the Halifax, said more action was needed: “We call on the government to link the threshold to house price inflation.
“According to our figures, the inheritance tax threshold would be raised to £406,600 if it were increased in line with the rise in house prices over the past ten years – more than £130,000 above its current level.”
The Conservatives accused the government of imposing a “stealth tax” by failing to increase the threshold.
“This is further evidence that more people than ever are now getting caught in [chancellor] Gordon Brown’s tax trap as he fails to increase the inheritance tax threshold in line with rising property prices,” said shadow chancellor George Osborne.
“Hundreds and thousands of hard working families who happen to live in parts of the country where property is expensive are being penalised.
“The tax system should support rather than punish families building their financial security and independence.”
