Inheritance tax is here to stay and high property prices mean more people need to pay, says expert
Inheritance Tax can be a huge expense
GETTY
With each passing day, it appears more likely that the Government will rely on Inheritance Tax (IHT) to raise more cash for public services.
Ministers clearly see a move to boost IHT receipts as a way to shore up the nation’s finances.
It means higher numbers of people inheriting property are set to be dragged into paying IHT.
When the tax-free threshold was set at its current level in 2009, the price of an average home was £157,000. It is now £285,000 - close to double what it was.
The threshold remains at its 2009 level, dragging an ever higher number of homeowners into Inheritance Tax
GETTYAnd yet the threshold remains at its 2009 level, dragging an ever higher number of homeowners into Inheritance Tax.
This is another example of so-called fiscal drag, much like Income Tax thresholds that have failed to keep up with inflation.
The issue is particularly acute in the south east and in our city centres where average prices are highest.
With further house price inflation likely this year, more and more people will find themselves subject to tax when they die.
The October budget, already slated to be ‘painful’, may add to the problem if the threshold is not increased but the payable rate is.
LATEST DEVELOPMENTS
Jonathan Rolande shared his analysisJONATHAN ROLANDE
But it can be argued that homeowners should accept the tax as a fact of life, or indeed, death.
Few would disagree that public finances and services are in a pretty dire state. Taxing the dead, or the beneficiaries, is seen as a relatively painless way to raise much-need revenue to spend on essential services.
It raised £7.5billion last year - what would replace that? It is mostly property that drags people into paying, and in most cases, house price growth is the epitome of unearned income.
Tenants do not benefit from this. IHT redresses some of that inequality and raises enormous sums of money. Fair or not, I am afraid it is here to stay.
Property expert Jonathan Rolande is the founder of House Buy Fast and lead spokesman for the National Association of Property Buyers. For more information visit www.jonathanrolande.co.uk.