UK IHT Revenue Up 13% In First Half, Says Halifax

by Jason Gorringe, Tax-News.com, London

25 July 2006

New Halifax research, based on data from HM Revenue And Customs, shows that inheritance tax revenue hit a record GBP1.7bn in first half of 2006, up GBP200m or 13% from the first half of 2005.

The amount of inheritance tax (IHT) revenue collected in the first half of 2006 matches total IHT revenue collected over the full financial year 1997/98, according to the research published at the weekend.

Last financial year (2005/06) the government collected GBP3.3bn in inheritance tax revenue and projects GBP3.6bn in revenue in the current financial year (2006/07).

Halifax estimated that the number of properties in the UK valued at more than the 2006/07 inheritance tax (IHT) threshold of GBP285,000 now stands at 1.5 million, or 8% of all owner-occupied properties. It projected this will nearly triple to 4.2 million properties by 2020 if the threshold is only increased in line with retail price inflation.

The building society went on to predict that the revenue collected by the Exchequer from IHT could rise to GBP5.5 billion a year in today's money by 2020.

Tim Crawford, Group Economist at Halifax, observed that:

"Inheritance tax revenues are clearly on the rise and the GBP1.7bn collected in the first half of this year matches the total inheritance tax take from the whole of the financial year in 1997/98."

"Inheritance tax revenues have risen because the threshold for the tax has failed to keep pace with the rise in property prices over the past ten years. More and more homes are now valued above the threshold and more estates are now potentially liable for the tax. We call on the government to raise the inheritance tax threshold to GBP430,000 to account for the increase in property prices over the past ten years."

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