Aug 7 2006
More estates are now paying inheritance tax (IHT) as the threshold for the tax has failed to keep pace with the increase in property prices over the past decade, according to one mortgage provider.
Figures from HM Revenue & Customs, as highlighted by Halifax, reveal the number of properties hitting the IHT threshold of £285,000 has risen by 72 per cent over the five financial years between 1998 and 2004.
Government figures also suggest a further 22 per cent increase in the number of estates paying the tax by the end of 2006/7.
A quarter of total IHT revenue is now generated from estates worth less than £500,000.
"The steep increase in the number of estates paying inheritance tax highlights that the current inheritance tax threshold of £285,000 is too low," said Tim Crawford at Halifax.
"Significantly, families with lower valued estates are paying an increased share of the total inheritance tax take whilst the super-rich are paying a smaller share. This trend is set to continue unless the government raises the threshold in line with house price inflation."
Halifax believes the government needs to raise the IHT threshold to £430,000 to account for the increase in property prices over the past ten years.
