Inheritance tax to hit 20% of properties

Around 20 per cent of UK properties could be hit by inheritance tax (IHT) by 2020, earning the government £5.5 billion a year, new research predicts.

In the first six months of this year the Treasury has already earned £1.7 billion from IHT– up £200 million from last year.

The amount of IHT collected this year now equals the total amount collected for the whole of the financial year 1997/98.

The reason for the growth in IHT receipts is being put down to the fact that neither of the last two governments have raised the threshold for when the tax is paid to keep it in line with property prices – which have soared in recent years.

Tim Crawford, group economist at Halifax, which undertook the research, said: "Inheritance tax revenues have risen because the threshold for the tax has failed to keep pace with the rise in property prices over the past ten years.

"More and more homes are now valued above the threshold and more estates are now potentially liable for the tax. 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."