CIOT warning on IHT in response to the report published by the Centre for Economics and Business Research. Contacts: John Whiting: 020 7804 4422 (office); 07710 027 595 (mobile)
Press Office: Viv Rees: 020 7245 4109 (office); 07900 220887 (mobile)
The Chartered Institute of Taxation, CIOT, is warning people to re-think their tax affairs to make sure they take into account Inheritance Tax (IHT) “the forgotten tax”. This is prompted by the research on housing values issued by the Centre for Economics and Business Research, CEBR, (22 April).
John Whiting, CIOT President said:
“Most people assume that IHT doesn’t apply to them – but with the average price of a home in London and the south east now over £220,000, it’s clear that just owning a house in many areas puts you into the IHT net. The Chancellor’s modest rise in the nil rate band to £250,000 last week doesn’t really go far enough.
“Inheritance tax is a levy that can be planned for and mitigated, but one has to question whether the tax is hitting the right target if ordinary householders are having to worry about it.”
In his April 2002 Budget, the Chancellor commented that 96% of estates were outside Inheritance Tax. The CIOT believes that the situation is changing.
John Whiting continued:
“The growth in house prices means that there is a potential time bomb ticking within the IHT system. This really can’t be the tax that everyone forgets about any more.”
The CEBR predicts that the average house price in the UK as a whole will rise to £300,643 by 2020. If the IHT threshold only rises with inflation, that could bring ordinary houses in most areas of the UK into the IHT net.