Inheritance Tax - The Creeping Threat
A recent report by the Halifax has highlighted the growing threat of Inheritance Tax (IHT), which is slowly but surely engulfing more and more of the population. Even though the government still insist that less than 6% of all Estates will incur Inheritance Tax duty, the signs are that this figure is rising all of the time - fuelled by the housing market.
On death, currently an Estate will only be subject to IHT if it is valued at more than £300,000, which may seem like a large figure to many. However, when you consider that over 2 million people live in a home worth more than £300,000 itself, you start to see the impact rising. The Halifax report found that the average house price was in excess of £300,000 in many areas of the country. Indeed, of the 236 postcode bands across the country, the amount where the average house price is great than the IHT ceiling has doubled since 2001.
If the trend of house prices growing faster than the increase in the IHT band continues, it is forecast that in excess of 4.3 million homes will be valued at higher than the IHT level by 2020 - a massive potential tax windfall for the government in power.
The IHT debate has been ongoing for some time, as the current ceiling of £300,000 is not connected to any increase in living costs, inflation, or house price rises, it is set on an adhoc basis with no set guidelines. Many are starting to question this creeping tax, with many consumer associations exerting pressure on the government as we approach Gordon Brown’s last budget on 21st March. Will he deliver some welcome surprises?
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