"In this world nothing is
certain but death and taxes,"
remarked Benjamin Franklin, one
of the founding fathers of the
United States of America.
Had he been able to see the
future, he might have lumped the
two together and added
inheritance tax (IHT) to his
list of certainties - for this
charge is creeping from the
outer fringes of many people's
personal finance planning to the
centre.
For years, you pay income
tax, mortgage yourself to the
hilt, save some cash (usually
taxed), and plough money into an
investment or two (ditto) - and
what happens when you die and
your pension (also taxed) stops
paying out?
The taxman steps in and grabs
a slice of your estate, to leave
your loved ones clutching a
smaller legacy.
From 6 April, any accumulated
wealth over £285,000 will be
taxed at 40 per cent at death -
a threshold that will rise to
£325,000 by 2009, Mr Brown
announced in last week's Budget.
For more and more families,
these figures will loom large.
House price rises since the
mid-1990s have catapulted
hundreds of thousands of
homeowners into the inheritance
tax net.
Since 1996, property prices
have risen by 176 per cent while
the IHT threshold has grown by
85 per cent, reports the
Halifax.
To underline the extent to
which the Treasury's largesse
has failed to keep pace with
inflation in bricks and mortar,
if the IHT threshold had been
raised in line with house prices
during this time, it would be
£425,000 from 6 April.
Today, some 1.5 million homes
in the UK are worth more than
the £285,000 threshold, says the
Halifax. And by 2020, this
number is expected to treble to
4.6 million households.
Mr Brown says that only 6 per
cent of estates pay IHT today,
but that figure stood at just 3
per cent when he came to power.
Some critics, including the
Express newspapers, have called
for its abolition - a radical
idea but one sure to result in
lost tax revenues being squeezed
from elsewhere in our finances.
Others just want it to be
linked, as proposed by the
Halifax, to house price rises.
The level at which you think
IHT should apply will probably
depend on your politics and
personality.
A £285,000 threshold may be
horribly close to home for many,
but it is a fantasy sum for
millions of others who might
never amass the sort of wealth
needed to test this limit.
What is clear, however, is
that more savers are becoming
trapped by the tax.
Where once it was only the
well-heeled who got whacked,
it's a levy likely to become
increasingly familiar to
ordinary families.
A review of IHT's growing
importance, impact and structure
is long overdue.
s.dunn@ independent.co.uk
"In this world nothing is
certain but death and taxes,"
remarked Benjamin Franklin, one
of the founding fathers of the
United States of America.
Had he been able to see the
future, he might have lumped the
two together and added
inheritance tax (IHT) to his
list of certainties - for this
charge is creeping from the
outer fringes of many people's
personal finance planning to the
centre.
For years, you pay income
tax, mortgage yourself to the
hilt, save some cash (usually
taxed), and plough money into an
investment or two (ditto) - and
what happens when you die and
your pension (also taxed) stops
paying out?
The taxman steps in and grabs
a slice of your estate, to leave
your loved ones clutching a
smaller legacy.
From 6 April, any accumulated
wealth over £285,000 will be
taxed at 40 per cent at death -
a threshold that will rise to
£325,000 by 2009, Mr Brown
announced in last week's Budget.
For more and more families,
these figures will loom large.
House price rises since the
mid-1990s have catapulted
hundreds of thousands of
homeowners into the inheritance
tax net.
Since 1996, property prices
have risen by 176 per cent while
the IHT threshold has grown by
85 per cent, reports the
Halifax.
To underline the extent to
which the Treasury's largesse
has failed to keep pace with
inflation in bricks and mortar,
if the IHT threshold had been
raised in line with house prices
during this time, it would be
£425,000 from 6 April.
Today, some 1.5 million homes in
the UK are worth more than the
£285,000 threshold, says the
Halifax. And by 2020, this
number is expected to treble to
4.6 million households.
Mr
Brown says that only 6 per cent
of estates pay IHT today, but
that figure stood at just 3 per
cent when he came to power.
Some critics, including the
Express newspapers, have called
for its abolition - a radical
idea but one sure to result in
lost tax revenues being squeezed
from elsewhere in our finances.
Others just want it to be
linked, as proposed by the
Halifax, to house price rises.
The level at which you think
IHT should apply will probably
depend on your politics and
personality.
A £285,000 threshold may be
horribly close to home for many,
but it is a fantasy sum for
millions of others who might
never amass the sort of wealth
needed to test this limit.
What is clear, however, is
that more savers are becoming
trapped by the tax.
Where once it was only the
well-heeled who got whacked,
it's a levy likely to become
increasingly familiar to
ordinary families.
A review of IHT's growing
importance, impact and structure
is long overdue.
