News: New record for inheritance tax

New Halifax research, based on data from the Inland Revenue, shows that inheritance tax revenue hit a record £1.7bn in first half of 2006, up £200m 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, only eight years ago. Last financial year (2005/06) the government collected £3.3bn in inheritance tax revenue and projects £3.6bn in revenue in the current financial year (2006/07).

Halifax estimates that the number of properties in the UK valued at more than the 2006/07 inheritance tax (IHT) threshold of £285,000 now stands at 1.5 million, or 8% of all owner-occupied properties.

The lender projects this will nearly triple to 4.2 million properties by 2020 if the threshold is only increased in line with retail price inflation.

Tim Crawford, Group Economist at Halifax, said: "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 £430,000 to account for the increase in property prices over the past ten years."

National Association of Estate Agents joint vice president, Chris Wood commented: "The NAEA has repeatedly asked the Government to raise the inheritance tax threshold in line with house price inflation. A vast number of properties now fall under the threshold, and the plan to increase this to £325,000 by 2010, simply does not go far enough."

"Whilst I appreciate that taxes have to be raised from some where, a 13% increase in revenue in just 12 months highlights the extent that inheritance tax has become a ‘stealth’ tax."

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