Halifax, the UK bank, has warned that the number of households caught in the Inheritance Tax net will triple to 4.2 million by 2020 if future governments move the IHT threshold only in line with retail prices.
The fifth Halifax Savings Report, published Wednesday, observed that successive governments have failed to increase the IHT threshold in line with house price growth. The bank calculated that the 2006/07 IHT threshold of GBP285,000 would now be GBP425,000 if it had been increased in line with house price inflation over the past ten years.
House prices have risen by 176% in the past ten years, compared with just an 85% increase in the IHT threshold. Latest figures from the Inland Revenue show that the number of estates with assets of less than GBP500,000 that pay inheritance tax has increased by 70% from 11,279 to 19,166 over the period 1996/97 to 2002/03.
A 4% increase in the IHT threshold is scheduled for April 2006 to GBP285,000, followed by a 5% increase in April 2007, which will bring the threshold to GBP300,000. In Budget 2006 the government scheduled increases in the threshold up to GBP325,000 by 2009/10. However, Halifax says this is not nearly enough to stop millions more entering the IHT net in the coming years.
"Since 1996/97 there has been a sharp increase in the number of estates paying inheritance tax and also the number of properties valued above the inheritance tax threshold," commented Martin Ellis, Chief Economist at Halifax.
"If this trend continues, we project that more than 4 million properties will be valued above the threshold by 2020 and that inheritance tax revenue could be as much as GBP5.5bn per year in today's terms," he added.
The revenue raised by the government through IHT has risen by GBP1.3bn since 1996/97 from GBP1.6bn to GBP2.9bn in 2004/05. A further rise is estimated in 2005/2006 to GBP3.2bn.
Around 6% of estates are estimated to pay IHT this year (35,000). The number has more than doubled since 1996/97 (15,000). About 40% of taxpayers, accounting for half of IHT revenues, reside in London and the South East.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment