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News: Inheritance tax here to stay

Tue, 10 Apr 07

The Chancellor's plans to increase the nil rate threshold for inheritance tax (IHT) over the next four years means that it is "here to stay" for the foreseeable future...

Reiterating its concerns over the tax, the National Association of Estate Agents (NAEA) has warned that this once "rich man's tax" is becoming a problem for the ordinary homeowner, as rising property prices mean more households will become eligible for IHT.

The overall value of assets that can be passed on free of IHT is set to increase from £285,000 to £350,000 by the 2010/2011 tax year, but the NAEA expressed disappointment that it has not yet been brought in line with house price inflation.

Peter Bolton-King, chief executive of the NAEA, said:

"While appearing impressive on face value, the £65,000 increase to the nil rate band over the next four years equates to a 5.3 per cent annual increase and while this is ahead of the current Retail Prices Index, it is way behind the current growth in house prices."

He advised that people seek information about how to protect the value of their assets.

Meanwhile, consultancy group the Way Group has suggested that Gordon Brown's Budget speech was "deliberately misleading" when he stated that ten per cent of estates will be subject to IHT in 2010.

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