4 in 10 Home Owners Will Be Liable For Inheritance Tax On Their Deaths
According to figures from Scottish Widows, 41 per cent of all households are now valued at more than the current inheritance tax threshold of £300,000, when total wealth is taken into account.
Rising house prices have left thousands more ordinary families facing the 40 per cent tax that was once the sole domain of the super-rich.
The current inheritance tax threshold was raised by just 3.6 per cent in April this year, while house prices have risen by 6.3 per cent.
The Chancellor, has so far resisted calls for the inheritance tax threshold to be linked to house price growth.
According to Scottish Widows, the number of people liable for the tax has risen nearly ten percent since last year, when a third of householders crossed the threshold.
"Our research shows that the Government raising the threshold by just over three per cent in the last Budget has not had any impact on the number of people liable for inheritance tax," said Anne Young, a tax expert at Scottish Widows.
"In fact, the situation has worsened."
"The six per cent rise in property prices means that thousands more people will now face inheritance tax this year compared to 2005.
While the average household wealth has increased from last year, so too has the amount of liabilities, meaning the possibility of an added burden of debt left behind to relatives in the event of a death."
The Scottish Widows survey showed that six in 10 home owners still did not know what the threshold was for inheritance tax, while only a third were able to identify it accurately at £285,000.
Two thirds of those questioned said they thought the current threshold was unfair, while four in 10 people with property valued at more than the threshold have not taken any steps to reduce the amount of tax payable.
Figures from HM Revenue & Customs have shown that the number of people paying the tax with estates valued at more than £2 million is not rising as fast as the number of people with less money paying the tax, suggesting that tax loopholes are allowing the wealthy to avoid paying, although you donít have to be wealthy to use a Nil Rate Band discretionary trust in your will.