Aug 22 2006
With much debate and confusion around regarding inheritance tax (IHT), Halifax has moved to clear up some facts.
The bank has put together all the key facts about IHT so consumers know were they stand as it calls for the government to substantially raise the threshold the tax is paid at.
It is calculated that the current IHT threshold of £285,000 would stand at £430,000 if it had increased in tandem with house price inflation over the last ten years.
Since 1995 the threshold has risen by 85 per cent - with a 30 per cent rise in 1996 and rises following retail price inflation since labour came to power in 1997.
However, house prices have increased by 129 per cent, while inflation has only risen by around 20 per cent.
Currently 1.5 million households would be liable for the tax - including 44 per cent of semi detached homes in London - but this could rise to 4.2 million if the link to retail price inflation is not broken.
Halifax group economist Tim Crawford said: "Inheritance tax revenue, along with the number of estates paying the tax, has risen sharply.
"This is largely due to the threshold for IHT failing to keep pace with the rise in property prices over the past decade. We call on the government to raise the inheritance tax threshold to £430,000 to account for the increase in property prices over the past ten years."
Last year the Treasury took in £3.3 billion in IHT - an increase of 49 per cent in the last five years.
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