The UK's leading mortgage lender Halifax has called on the government to raise the inheritance tax threshold from £285,000 to £430,000 to account for the massive rises in property prices in the last decade.
In the five years up to the financial year 2003/04, the number of estates paying inheritance tax rose by 72 per cent to 30,451 and according to government estimates, a further 22 per cent increase in estates paying the tax will occur up to the end of 2006/07.
According to analysts this is a sign that the thresholds of the tax are failing to keep pace with rising property prices.
The number of estates worth less than £500,000 paying the government-levied fee rose by 75 per cent in the five years up to 2003/04. These estates now account for more than 70 per cent of all properties that are eligible for inheritance tax.
"The steep increase in the number of estates paying inheritance tax highlights that the current inheritance tax threshold of £285,000 is too low," said Tim Crawford, group economist at Halifax.
"Significantly, families with lower valued estates are paying an increased share of the total inheritance tax take whilst the super-rich are paying a smaller share," he added, before urging the government to make amends for its lethargy on raising inheritance tax thresholds in recent years by upping the level to £430,000.To read more about property, click here.
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