The Government’s own estimates suggest a further 22 per cent increase in the number of estates paying the tax by the end of 2006/07. More estates are now paying IHT as the threshold for the tax has failed to keep pace with the increase in property prices over the past decade.
More estates worth less than £500,000 now pay IHT
The number of estates with a value of less than £500,000, paying IHT rose by 75 per cent over the five years to 2003/04 to 21,750. These estates now account for 71 per cent of all estates paying IHT.
A quarter of total IHT revenues generated from estates worth less £500,000
In 2003/04, eight per cent of all estates worth less than £500,000 paid IHT, up from only five per cent in 1998/99. The average amount of IHT paid by these estates was £31,393. Estates valued less than £500,000 accounted for twenty five per cent of total IHT revenue in 2003/04, £683m.
Estates valued over £2 million account for smaller share of IHT revenue
Estates worth more than £2,000,000 accounted for 19 per cent of total IHT revenue in 2003/04, £526m, down from 23 per cent of total IHT revenue in 1998/99. Estates valued between £500,000 and £1,000,000 generated the most IHT revenue in 2003/04, £921m, or 33 per cent of the total.
Halifax group economist Tm Crawford says:
“The steep increase in the number of estates paying inheritance tax highlights that the current inheritance tax threshold of £285,000 is too low. Significantly, families with lower valued estates are paying an increased share of the total inheritance tax take whilst the super-rich are paying a smaller share.”