13th April 2007 12:30
According to The National Association of Estate Agents (NAEA), Gordon Brown’s announcement that inheritance tax will remain until at least 2011 indicates that the tax is becoming increasingly “main stream” and is likely to be a permanent fixture. The Chancellor’s budget proposals reject the NAEA’s demands for inheritance tax to be brought in line with house price inflation.

Whilst the proposals include plans to raise the tax free threshold, the minimal changes will mean that increasing numbers of properties will be above the threshold as property prices continue to rocket. The overall value of non-taxable assets will be increased over the next four years from £285,000 to £350,000 by 2010/11. Considering that at the end of last year the average detached property was valued at over £300,000, fewer homeowners will escape under the net in the near future.

Peter Bolton-King, Chief Executive of the NAEA, said: “It is disappointing that inheritance tax has not yet been brought in line with house price inflation. Whilst appearing impressive on face value, the £65,000 increase to the nil rate band over the next four years equates to a 5.3% annual increase and whilst this is ahead of the current Retail Prices Index, it is way behind the current growth in house prices. I would urge people to seek advice as to how they can best protect the value of their assets when the time comes.”

Today, over six million homeowners are affected by inheritance tax, but in four years time, with property prices rising, the figure will be much higher. Homeowners are advised to seek independent legal advice for ways to reduce inheritance tax bills.

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