Inheritance tax will strike more than four million homes by the year 2015, and six million by 2025, if the government fails to link the threshold with house price inflation as values continue to rise.
Research from the Bank of Scotland also estimated that the take from inheritance tax is likely to double from the 1996/97 levels of £1.6bn to a projected £3.3bn in the year 2005/2006.
Tim Crawford, group economist at Bank of Scotland, said: ‘Increasing numbers of people on modest incomes are now potentially liable to pay inheritance tax, something that used to apply mostly to the well off.
‘This trend will worsen unless the government acts and raises the thresholds for these taxes to reflect the increase in property prices.’
Bank of Scotland believes the current threshold of £263,000 would be £390,000 if it had been adjusted in line with house price inflation.
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