THE NUMBER OF PEOPLE hit with inheritance tax bills is set to rise by around a third this year, according to Treasury predictions.
Rising house prices and the recovering economy are expected to push tens of thousands more people over the £325,000 threshold for paying inheritance tax, which would see number of families required charged on the estates they inherit will increase by 35% to 35,600 during the course of this financial year.
The number liable for the duty is expected to increase again next year to 43,800, something that has led some economists and tax experts to call for reform, with increasing numbers of people caught by rising property prices.
Estates become liable for the tax when the value rises above £325,000. Married couples are entitled to double the allowance, passing on assets to their relations worth up to £650,000.
However, this arrangement is less generous than any other western country apart from Ireland. The threshold for death duties in the US is about £3.2m.
Before the last election, David Cameron promised to cut inheritance tax by raising the threshold to £1m but the reform was blocked by the Liberal Democrats.
Baker Tilly tax partner Gary Heynes told the Telegraph he had seen an increase in inquiries from people in their forties, fifties and sixties looking for help to “preserve their inheritance”. He said: “I have already seen many more ‘next generation’ individuals asking for advice on inheritance tax on their ageing parents’ estates.”
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The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform