House prices inch towards inheritance tax threshold

Posted: 25 Sep 2006 12:26:46 GMT

Average house prices in one in ten towns across England are now higher than the inheritance tax (IHT) threshold, new figures reveal.

Average house prices in one in ten towns across England are now higher than the inheritance tax (IHT) threshold, new figures reveal.

A new study by Halifax found that the average house price in 48 of the 492 English towns surveyed was higher than the IHT threshold of £285,000, two-and-a-half times the number in 2001.

Around 1.4 million properties are now valued in excess of the 2006/07 threshold of £285,000 and almost 20 per cent of towns in England have average house prices within 20 per cent of the IHT threshold (just over 90 towns). The Halifax reports that almost a quarter (22 per cent) of UK towns have one in five house sales above the IHT threshold.

The vast majority of the towns with average property prices exceeding the IHT threshold are located in the south of England, with the only exceptions Wilmslow in Cheshire and Ilkley in West Yorkshire.

The bank predicts that 20 per cent of properties in England, 3.5 million homes, will be above the IHT threshold by 2020, with far more estates worth less than £500,000 paying IHT.

More than a third of London boroughs (13 out of 32) currently have an average house price above the threshold and nearly one in five towns in the south east (33 out of 169) have an average house price above the IHT threshold.

Halifax economist, Tim Crawford, said: "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."

UK house prices have risen by around 179 per cent over the past decade, while the IHT threshold has risen by 85 per cent over the same period.

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