Halifax research has shown the total number of estates paying inheritance tax (IHT) rose by 72% over the five years to 2003/04 to 30,451.
The number of estates with a value of less than £500,000, paying IHT rose by 75% over the five years to 2003/04 to 21,750. These estates now account for 71% of all estates paying IHT.
In 2003/04, 8% of all estates worth less than £500,000 paid IHT, up from only 5% in 1998/99. The average amount of IHT paid by these estates was £31,393. Estates valued less than £500,000 accounted for 25% of total IHT revenue in 2003/04, £683m.
Tim Crawford, group economist at Halifax, said: "The steep increase in the number of estates paying inheritance tax highlights that the current inheritance tax threshold of £285,000 is too low.
Significantly, families with lower valued estates are paying an increased share of the total inheritance tax take whilst the super-rich are paying a smaller share.
"This trend is set to continue unless the government raises the threshold in line with house price inflation. We call on the government to raise the inheritance tax threshold to £430,000 to account for the increase in property prices over the past ten years."
Pain thresholds key
To communicate equity release's wider opportunities and benefits, writes Chris Flowers, providers and advisers need to think about how best to engage not only its usual target audience but also their families
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