(1888PressRelease)
March 01, 2007 - Figures from Halifax indicate that the number of postcode districts where the average house price is above that of the IHT threshold has more than doubled since 2001.
Some 11 per cent of postcode districts now have average house prices above the current limit.
Some 20 per cent of postcodes recorded at least a quarter of sales as being above the IHT threshold, an indication that many investors can expect their next of kin to be taxed heavily should the property be passed down.
The figures are despite the threshold limit increasing to £300,000 in the 2007-08 period, from the 2001-02 figure of £242,000.
These numbers are evidence of the trouble that many investors have had recently in making new purchases in the property market as house prices have soared.
Now, as more and more asking prices surpass the IHT limit, investors, especially those hoping to leave something for loved ones, will be forced to ask whether the investments are sufficiently attractive.
Tim Crawford, the group economist at Halifax, commented: "House prices continue to increase more quickly than the inheritance tax threshold. There are 2.3 million properties in the UK valued at more than the inheritance tax threshold.
"We call on the government to raise the inheritance tax threshold to £460,000. That would account for the significant rise in house prices over the past eleven years. We also call on the government to commit to increase the inheritance tax threshold in line with house price inflation in the future."
He added that Halifax does not dispute the right of the government to collect inheritance tax but insists that as an asset, it should be taxed at a fair value.
Some 54 per cent of average London postcodes are above the limit with a 40 per cent figure recorded in the south-east of England.
However, Newcastle and Padstow have seen the biggest increase in homes surpassing the IHT limit in the past five years, with both recording a 39 percentage point increase.
Further bad news for investors comes from the company's prediction for 2020.
Halifax claims that if the limit is increased only in line with retail price inflation an extra two million properties will be above the threshold in 2020, a rise of 88 per cent.
