The average house price is now over the inheritance tax threshold in 10 per cent of English towns, according to new research by Halifax.
Of the 482 towns surveyed, the average house price is higher than £285,000 in 48 towns, which is two and a half times the number five years ago when only 4 per cent – 19 houses – had a value of the threshold at the time of £242,000.
Of these 48 houses, 46 are in the South of England.
The other two are in Wilmslow in Cheshire and Ilkley in West Yorkshire.
Halifax says 20 per cent of properties in England are projected to be above IHT threshold by 2020.
Halifax estimates that 1.4m – 9 per cent of English properties are now valued at more than the 2006/07 threshold of £285,000. It says the number of English properties potentially liable for IHT will more than double to 20 per cent or 3.5m properties by 2020 if the threshold is only increased in line with retail price inflation.
Halifax is calling on the political parties to reform IHT and raise the threshold to £430,000 to allow for house price inflation over the past 10 years and to make a commitment to link the threshold to house price inflation in the future.
It estimates that the change would cost the Exchequer approximately £1bn per annum in lost revenue.
Economist Tim Crawford says: “The potential reach of inheritance tax is growing. More and more homes are now valued above the threshold. 10 per cent of English towns have an average house price above the threshold, compared to only 4 per cent five years ago.
“We call on the Government to raise the inheritance tax threshold to £430,000. Doing so would allow for the significant increase in property prices over the past decade. It would also ensure that many middle income home owners avoid a tax which was never intended that they pay in the first instance.”
