Reading about recent house price trends on www.rightmove.co.uk that shows April prices 15% higher than a year ago emphasises just how disingenuous Gordon Brown was in his recent Budget statement when he suggested that by 2010-11 only 6% of estates will incur inheritance tax. A Treasury spokesperson made it clear last summer (August 2006) that currently (almost a year ago) only 6% of estates suffered IHT. There are more holes in Brown's assertions than a colander. Let me outline just three of them:
He is assuming that recent HMRC records of 6% remains accurate and will continue to do so for another 3-4 years. With house prices increasing so rapidly compared with the Nil Rate Band, there is little chance of seeing static numbers of taxpayers. Halifax recently estimated that nearly a third of all detached properties in England and Wales are valued at more than the 2007-08 threshold of £300,000. It is going to get a lot worse!
It is only now (and the next couple of decades) that the post-WW2 generation of entrepreneurs and property owners of the 1970s and 1980s are getting older and beginning to depart their mortal coils. This trend will really take off over the next few years, having a dramatic impact on the numbers of IHT payers and the amount of tax collected.
Brown talks about estates rather than families so that he can depress the numbers. Most families have two estates, one for each partner, so we are really talking about 12% of families rather than his stated 6%.
After The Times broke the story of his knowing rape of the pensions industry, can any of us trust this man? The moral of this tale is that we must all encourage clients to take IHT avoidance action sooner rather than later.
Lisa used as 'top-up'
Two FCA consultation papers
UK's poorest retirees most affected
'5% no longer the norm'