Tax surge from £360bn inheritance windfall

Britons are collectively set to inherit £360bn worth of property during the coming 15 years as the first wave of baby-boomers pass on their assets, said Halifax Financial Services.

The group estimates that by 2020 housing will account for 60 per cent of all assets left behind by people when they die.

Halifax said that with the tax threshold likely to rise in line with inflation rather than house price growth - which tends to rise at a faster pace - more properties would be caught in the inheritance tax net. The beneficial impact will be magnified by the expected increase in the number of elderly homeowners passing away.

Martin Ellis, the chief economist for Halifax, said: "It represents an opportunity for the Chancellor to raise quite a bit of money through inheritance tax because there will be more properties passed on."

Inheritance is already a major fundraiser for the Government. Receipts in the first three years of the decade rose 14 per cent from £2.04bn to £2.36bn.

There are already signs of an accelerating trend. December's pre-Budget report showed revenues rising by 24 per cent over the three years to April 2007 when they will hit £3.3bn.

Halifax forecast that the number of estates with property assets would increase from 104,950 in 2003 or 59 per cent of the total, to 115,347 or 65 per cent.

Mr Ellis said Halifax was currently crunching the numbers to produce an estimate of the total gain to the Exchequer that is will publish next month. "We are about to see the first generation consisting of a mass of owner-occupiers pass away and property will be a bigger component of their estates," he said.