Accountancy firm calls for IHT rethink

A member of the world\'s fifth-largest accountancy network has called on chancellor Gordon Brown to raise the Inheritance Tax threshold in his final Budget on March 21.

BDO Stoy Hayward, part of BDO International, warns that the fact the tax’s threshold has not kept up with spectacular house price inflation has made IHT deeply unpopular.

It advises Brown to raise the exemption threshold to £500,000, making the tax more equitable.

Stephen Herring, tax partner at the firm, says: “Brown could scrap IHT by treating death as a disposal for Capital Gains Tax purposes, applying the existing business asset taper relief and limiting the effective tax rate to 10%.

“It would be a good idea to provide a sensible threshold of, say, the first £100,000 of gains.”

But Herring adds that making private residences exempt could stoke house price inflation at the expense of first-time buyers.