Gordon Brown's Budget speech was "deliberately misleading" when he stated just 6% of estates will be caught by Inheritance Tax in 2010, claims the Way Group.
In the Budget last Wednesday, the Chancellor of the Exchequer stated raising the nil-rate band threshold to £350,000 for the year 2010-11 will ensure 94% of estates will avoid paying IHT.
However, an estate planning specialists the Way Group says each family normally consists of two estates – one for each partner - with IHT normally only due when the second person dies.
It argues converting the Chancellor's estimate from ‘single’ estates to 'family' means in reality 12% of families will be “stung” with an IHT bill within three years.
And it warns because of spiralling property prices many of these families will be part of the post-World War Two generation and not the more wealthy entrepreneurs and property-owners of the 1970s and 1980s.
Paul Wilcox, chairman of the Way Group, says property prices are likely to be one of the key drivers of families being exposed to IHT, as research from the Halifax recently estimated nearly a third of all detached properties in England and Wales are valued at more than the 2007/08 threshold of £300,000.
He suggests “it is all well and good” for the Chancellor to announce the IHT threshold will rise in stages each year to £350,000 by 2010, but if house prices continue to rise at their current rate, he says this increase will mean in real terms the burden will be further increased, making “sensible and early tax planning even more important”.
Wilcox adds; “Given the fact so many taxpayers are in danger of being hit by IHT, it is increasingly important to make gifts within the nil rate band every seven years in order to double or treble available exemptions.”
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