Scottish Widows: Households hit by IHT will remain 'artificially high'

12 April 2007
Almost one in four households in the UK will have an estate valued above the £300,000 threshold for death duty when the new lower bound is introduced, Scottish Widows has claimed.

As a consequence, 9.4 million homeowners will be trapped above the inheritance tax (IHT) threshold in the coming year.

At present, 41 per cent of homeowners are liable to pay the duty imposed on households valued above £285,000 if they do not take steps to avoid the "tax trap", said Scottish Widows tax expert Anne Young.

And although the raised threshold of £300,000 will cut that proportion to 37 per cent, more households will still be liable than in the tax year 2005-06, Scottish Widows has calculated.

"The number of people that could be affected by this tax still remains artificially high, due to increasing house prices and wealth," commented Ms Young.

Dismissing Gordon Brown's recent budget announcement of higher IHT thresholds as "a sweetener", she stressed that the move to a threshold of £350,000 in 2010 would still leave many homeowners exposed to the tax.

If the IHT threshold had increased in line with house prices since 1988, it would now be £419,754, the study showed.

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