The number of homes worth more than the inheritance tax threshold has nearly trebled during the past five years because of the rise in house prices, research showed today.
Halifax, the UK's largest mortgage lender, said 2.1 million properties were worth more than £275,000, the level above which inheritance tax is paid. It said this was the equivalent of 12 per cent of all owner-occupied homes, and well up on the 800,000 properties that would have qualified for the tax in 2000.
The Conservatives seized on the figures, saying it was the latest example of a "stealth tax" imposed by Labour. "Thousands of hard-working families who happen to live in parts of the country where property is expensive are being penalised," George Osborne, the shadow Chancellor, said. "This is further evidence that more people than ever are getting caught in Gordon Brown's tax trap as he fails to increase the inheritance tax threshold in line with rising property prices.
But the Treasury said no previous administration had linked tax thresholds to price movements of any particular asset. "The practice of this Government is no different," a spokesman said. "In the Budget we announced the threshold for inheritance tax would rise by more than indexation this year and in each of the next two years, to £300,000 in April 2007. As a consequence, 6 per cent of estates will pay inheritance tax."
Inheritance tax is charged at 40 per cent on any assets worth more than £275,000 that someone leaves behind when they die, although the threshold will be raised to £300,000 by April 2007.
Halifax said Treasury estimates showed inheritance tax revenues during the fiscal year to March would be more than double the 1996-97 figure, the last year before Labour won power. The tax take has risen to £3.4bn from £1.6bn the year before Labour came to power.Reuse content