IHT revenue reaches record levels

Inheritance tax (IHT) revenues hit record levels in the first seven months of the current financial year as rising house prices cause increasing numbers of properties to breach the £285,000 threshold.

The government has reaped a record £2.1 billion over the last seven months from IHT, up nine per cent on the same period last year, and Halifax predicts that by 2020 revenue could reach £5.5 billion, 244 per cent more than ten years ago.

This is primarily caused by the ever-increasing number of properties that can now be charged IHT. Eight per cent, or 1.5 million, of owner occupied properties are now worth more than £285,000, estimates Halifax, and this figure is likely to triple to 4.2 million homes by 2020 if the IHT threshold is raised only in line with inflation.

Martin Ellis, chief economist at Halifax, said: "More and more parts of the country are now being impacted by property related taxes as the thresholds for both inheritance tax and the higher rates of stamp duty have not kept pace with house price inflation.

"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."

Kensington and Chelsea and the cities of London and Westminster were found to have the highest proportion of sales above the IHT threshold while the highest density outside of the south is in Stratford-upon-Avon and Tatton in the north-west.