Inheritance tax 'unfair' to homeowners

Saturday, 03 December 2005 12:00

One in three owners of detached houses are now liable for inheritance tax as property prices rise way above the government threshold, a new report reveals today.

Research by the Halifax bank shows that one third of detached property sales in the UK are now above the current inheritance tax allowance of £275,000.

The average price of a detached home in Britain is now £270,107 which is only two per cent below the current inheritance tax threshold.

Five years ago, only one in eight homes was worth more than that year's threshold of £234,000.

Halifax's chief economist, Martin Ellis, said: "According to our figures, the inheritance tax threshold would be raised to £406,600 if it were increased in line with the increase in house prices over the past ten years.

"We call on the government to link the threshold to house-price inflation."

He added that inheritance tax had become a particular problem in London where 86 per cent of property sales were over the £275,000 threshold.

Chancellor Gordon Brown raised the threshold for inheritance tax from £260,000 to £275,000 in March 2005. It will rise further to £300,000 by 2009.

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