IHT - £160,00 Required

Back in days of the mid-1990s, Blur and Oasis were 24-hour party people, basking in the era of Britpop, Tony Blair and Gordon Brown were gearing up to snatch number 10 Downing Street from the Tories and Take That were massive –it would appear they still are. Also the inheritance tax threshold was a pint sized £154,000.

It has grown somewhat, but nowhere near enough. Since 1995, house prices in the UK have risen by an impressive 199% - more than double the IHT threshold leap of 95%, to £300,000 for the 2007/08 tax year.

Clearly Gordon Brown has not been keeping up because according to Halifax if the threshold had increased in line with house price inflation since then, it would be now be at the far more reasonable level of £460,000.

IHT Revenue raised in 2006 alone was a record £3.5 billion, up £375 million or 12 per cent, on 2005 when £3.1 billion was collected. The government's own projections are for annual IHT revenues to reach £4.1 billion in 2007/08 - not music to any homeowners ears.

The number of owner occupied properties in the UK valued at more than the 2007/08 IHT threshold now stands at 2.3 million, or 12 per cent of all owner-occupied properties.

In 2001 only 1.3m properties or 7 per cent of owner occupied properties were valued above the then IHT threshold of £242,000. If the IHT threshold was increased to £460,000 only 4 per cent would be valued above the threshold.

So today - clearly something, namely a further £160,000 is amiss.

And now Halifax projects that the number of properties valued above the IHT threshold across the UK will rise by a further 2 million by 2020 to 4.3 million properties if the threshold is only increased in line with retail price inflation.

On this basis the number of postcode districts in England and Wales with an average house price above the IHT limit would grow to 480 in 2020 from 236 today.

Bearing in mind the astonishing rise in house-price levels over the past 10 plus years, Halifax, among others has been calling for a much fairer playing field but so far not much has been done to curb this most unpopular of taxes. Tell us your views.

Comments

[John Blackmore]

There is little point in increasing the IHT nil rate band to £460,000. Those with modest estates will still pay and those with large estates will still avoid the tax one way or another.The time has come to accept that IHT isn't working.

Far better to get rid ofthe tax entirely and to collect the amount needed by other means - increasing VAT or income tax.

[Gary Richmond]

Unfortunately, Inheritance Tax is working - for Gordon Brown!

There is no use tinkering with this vicious, iniquitous tax. It isn't flawed. It's wrong, Socialist and spiteful.

Please don't suggest that if you abolish Inheritance Tax that the money must come from somewhere else. In terms of revenue it is small beer.

Suggesting a replacement tax is like a mugger demanding that if you won't hand over you wallet you will have to make arrangements to hand over something else!

Inheritance Tax is a triple-whammy. If you work, you pay tax and NI (tax by another name) through PAYE, what you save from what's left is taxed too. Then, just for good measure if you die and your estate exceeds the nil-band rate the taxman comes back for a final helping.

Like the Terminator, you cannot negotiate with HMRC and it will not stop, ever, until it has got what it wants. The only way to terminate this infernal tax on hard work and thrift is to take an axe to the root of this poisonous weed and destroy it utterly.

In fact, this must be made a key issue for the next general election. As house prices keep on rising inexorably it should loom large in the election debates.

Unfortunately, I live in the internal leper colony of the United Kingdom (which you will know better as Northern Ireland) and will not be seeing anyone from the Labour or Conservative parties on my doorstep justifying this despicable tax - as a tax-paying citizen of the UK I am deliberately excluded from the full civil rights taken for granted in England, Scotland and Wales.

I will therefore have to rely on my fellow citizens in the rest of the UK to do the dirty work. Remember, if we don't stop this tax juggernaut soon, it will flatten us all and you can bet your last tax demand that some faceless bureaucrat in the Treasury is already dreaming up another wheeze to extract more money from your savings. Don't wait until they start taxing house sales in a manner that makes Stamp Duty look reasonable.

I have been contemplating setting up a website to campaign against Inheritance Tax. Once it have researched the technical requirements and the subject matter it may post back here and we can ge things started.