Thousands more paying IHT

By MICHAEL CLARKE
Updated: 06:32 EST, 7 December 2004

ROCKETING house prices have pushed increasing numbers of families into the inheritance tax trap, the National Audit Office reported today.

Inheritance tax (IHT) is payable at 40% on estates worth more than £263,000. In the past five years the number of estates drawn into the IHT net has risen by two thirds.

In the 2003-04 financial year, 30,000 estates paid £2.5bn in IHT to the Treasury.

The news will anger a number housing organisations and banks that called for Chancellor Gordon Brown to raise the IHT threshold in his Pre Budget Report.

They point out that the tax was designed to target the wealthy, but now snares many middle-income families who live in areas where property prices have risen steeply.

Halifax and the Bradford & Bingley were two major financial institutions that lobbied Mr Brown to increase the threshold.

The NAO says tougher penalties for submitting inaccurate IHT returns also boosted the tax take. However, it said the Inland Revenue should do more to clamp down on fraudulent and inaccurate IHT returns.