Halifax is calling on the government to raise the inheritance tax threshold to £430,000 and to make a commitment to link the threshold to house price inflation in the future to allow for house price inflation.
Research from the lender shows that the combined revenue raised from IHT and the higher rates of stamp duty on residential property reached £6.7bn in the past financial year.
Halifax says this highlights the effects of the failure to increase the thresholds for IHT and the higher rates of stamp duty in line with house price inflation.
The lender estimates that this change would cost the Chancellor around £1bn per annum in lost revenue and says that if the higher stamp duty thresholds had been increased in line with house price inflation since July 1997, the £250,000 threshold would now stand at £650,000 whilst the £500,000 would be £1.3m.
Chief economist Martin Ellis says: “Smaller inheritances, reliant mainly on the family home, are more likely to attract a 40 per cent rate of inheritance tax than five years ago, while stamp duty bills of more than £7,500 are becoming more common.
“We call on the government to raise the higher stamp duty thresholds and the inheritance tax threshold in line with the increase in house prices over the past decade. We believe the government also should commit to index link all property related tax thresholds to house price inflation in the future.”