Halifax calls for higher IHT threshold

Halifax has blamed the government’s 285,000 threshold for the 72% rise in the number of estates paying Inheritance Tax over the five years to 2003/04.

A colossal 30,451 estates in the UK were liable to pay the tax with a further 22% rise to 37,000 expected by 2006/07. Halifax says the IHT threshold has failed to keep pace with rising property prices over the past decade.

The bank says estates valued between 500,000 and 1m generated the most revenue in 2003/04 – 33% of the total IHT revenue.

In comparison, estates worth more than 2m acc-ounted for just 19% of revenue in the same period, down from 23% in 1998/99.

In the financial year 2005/06 the government collected 3.3bn in IHT revenue and expects this amount to rise to 3.6bn in 2006/07.

Jonathan Burridge, managing director of Quantum Mortgage Brokers, says: “At one time IHT only aff-ected the wealthy. Now it is clear the threshold has not been kept in line with the value of people’s assets.

“A recent report by Portman shows that by 2018 there could over one million property millionaires, before taking into account any other savings. This is a strong indicator that what is a deeply unpleasant tax is also becoming unjust. It also proves we can’t escape taxes, even in death.”

Tim Crawford, group economist at Halifax, says: “The steep increase in the number of estates paying IHT shows the threshold of 285,000 is too low.

“Significantly, families with lower valued estates are paying an increased share of the total IHT take while the super-rich are paying a smaller share.”

He adds: “This trend will continue until the government raises the threshold in line with house price inflation. We call on it to raise the threshold to 430,000 to account for the increase in prices in the past 10 years.”