The government is being urged to raise the inheritance tax (IHT) threshold to account for the increase in property prices over the past ten years, according to one mortgage provider.
At the moment, consumers who inherit a property worth 285,000 or more pay IHT at 40 per cent.
Figures from HM Revenue & Customs reveal that the number of estates paying IHT has risen by 72 per cent between 1998 and 2004.
The government estimates a further 22 per cent increase in the number of estates paying the tax by the end of 2006/07 as the price of property continues to rise.
Halifax suggests that the government needs to raise the threshold to 430,000 to keep pace with the increase in property prices over the past decade.
“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, group economist 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.”
In the last financial year (2005/06) the government collected 3.3 billion in IHT revenue and projects 3.6 billion in revenue in the current financial year (2006/07).
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