Inheritance Tax - Is It Such A Big Issue?
As many experts forecast the strong possibility of a snap general election in September, to utilise Gordon Brown’s honeymoon rating in the polls, it seems that the issue of tax has returned to the political agenda. Recently David Cameron has been under pressure from those right of central who are concerned that the Conservative party is moving away from traditional polices, but it seems the Tories may be about to take on Gordon Brown’s record on taxes.
First on the agenda is inheritance tax, which while often considered a tax for the rich, is now beginning to hit many of the working class. A substantial rise in property prices over the last 10 years, and an increase in the inheritance tax allowances which in no way reflects the rise in asset values, has dragged many in to the inheritance tax trap. In effect, under Gordon Brown’s instruction, we have seen the inheritance tax allowances (the level after which tax is paid on an Estate) fall substantially in real terms.
The inheritance tax allowance is currently £300,000, meaning that tax of 40% is charged on any excess over that figure. When you consider that the average house in the UK is now valued at some £150,000, not to mention pensions, policies, and stock market investments, the number of estates which will pay taxes is set to increase substantially - it has already doubled since Labour came to power.
A report from Scottish Widows indicates that potentially 4 out of 10 home owners may well end up with estates in excess of the £300,000 threshold over the next couple of years. It will be interesting to see how Gordon Brown responds to the Conservative’s return to the subject of tax, and tax cuts.
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