Both levies are expected to net the government in 2005/06 a whopping 3.4bn. This is higher than revenues anticipated from Capital Gains Tax at 3bn and Petroleum Revenue Tax at 1.5bn.The UK’s biggest lender also reveals that one in three detached property sales are now above the present IHT threshold of 275,000. It adds the average price of a detached property is 270,107, only 2% below the IHT threshold. This comes as research from the UK Housing Review shows that home owners paid 6.5bn in Stamp Duty and Inheritance Tax last year, more than four times the amount they paid in 1997. Stamp Duty – at 5.5bn – accounts for most of the tax paid by home owners but Inheritance Tax bills on property rose to 1.1bn, compared with 480m in 1997. In the review, published jointly by the Council of Mortgage Lenders and the Chartered Institute of Housing, Professor Steve Wilcox from the Centre for Housing Policy at the University of York, analyses gross tax paid on residential property since 1991. He concludes that Stamp Duty and Inheritance Tax payments are growing faster than the amount the government would take if it levied Capital Gains Tax on housing wealth. Wilcox says that in the tax year prior to 2004/05, the most recent year for which Inland Revenue data is available, the amount paid by home owners in Stamp Duty and Inheritance Tax grew by almost 2bn. By contrast, the government’s decision to raise the Stamp Duty threshold from 60,000 to 120,000 before the last general election will reduce payments on residential property by only 250m. And even this sum is set to fall as the number of homes sold for under 120,000 declines. Peter Williams, deputy director-general of the CML, says: “We applaud the government’s election pledge to expand owner-occupation but the reality is that this goal is in danger of being thwarted by the growing cost and complexity of policy proposals and taxation measures.”
The Government will make the same amount from Inheritance Tax revenue as it will from beer and cider duties in 2005 and 2006, research from Halifax reveals.