….close in on pre-recession levels as more families are hit.
- Threshold has been frozen at £325,000 since April 2009
- Married couples and civil partners can pass on £650,000 tax-free
- The U.K inheritance tax rate is one of the highest in the world
Inheritance tax (IHT) payments are closing in on pre-recession levels after climbing 8.6 per cent in just one year, official figures show.
Total payments hit around £3.4billion in the last year as rising house prices saw thousands more middle class families snared by the £325,000 threshold.
At the same time figures in the latest Nationwide house prices index showed stamp duty revenue near its all-time high of 2007 to 2008 – as rising property purchase prices, increased sales and higher bands raked in almost £10billion in the year to June.
A freeze in the inheritance tax threshold since April 2009 has contributed to a surge in eligible estates, government figures have shown.
Had the threshold been kept in line with inflation, it would now have been bumped up to £380,152.
At 40 per cent on the value of any estate above £325,000, Britain has one of the highest rates of inheritance tax. Married couples are entitled to double the allowance, passing on assets of up to £650,000 to their children or other relatives free of tax.
Inheritance tax will be paid by one in ten people by 2018, compared with just under one in 20 today, Treasury forecasts claim.
The tax was intended for the rich, but ministers have not raised the threshold in line with rising property values, which have gone up by 10.6 percent in the last year alone, according to figures from Nationwide today.
London and the South have been particularly badly affected, with the average property in the capital worth £450,000.
The number of people paying IHT in Harrow and the surrounding Ruislip and Uxbridge in London, is roughly the same as those paying the tax in the whole of the North East of England, analysis of the figures by NFU Mutual found.
Similarly, the constituency of Richmond Park, London has more IHT payers than all of Birmingham.
Eligible taxpayers in the south east pay £193,00 on average, compared to £106,000 in Wales and £117,000 in Northern Ireland.
Stephen Berry, personal finance specialist at NFU Mutual, said: ‘Over the past two decades inheritance tax has gone from being an issue for the super-wealthy to something that affects millions of people – driven largely by the rise in house prices.
‘Although some people aren’t too concerned that the government will take a large chunk from their estate when they die, many would far prefer that as much as possible goes to their children instead.’