Newspaper article The Evening Standard (London, England)

Inheritance Tax Burden Is Lightened for the Few, Not Many

Newspaper article The Evening Standard (London, England)

Inheritance Tax Burden Is Lightened for the Few, Not Many

Article excerpt

Byline: JONATHAN PRYNN

THE Chancellor today lifted the threshold for inheritance tax by more than expected - but rejected demands for a wholesale reform.

The level at which the 40 per cent levy (IHT) starts to be paid is raised this year by 4.5 per cent from [pounds sterling]263,000 to [pounds sterling]275,000.

Next year it will go up to [pounds sterling]285,000 and in 2007 to [pounds sterling]300,000.

The increases are the most generous of his period as Chancellor - in the past he has merely nudged them up in line with inflation.

Today's rises are a response to concerns about the impact of IHT on middle class families. Rising property values have sucked millions of ordinary homeowners into a tax designed for the very wealthy.

However, the lack of more root-andbranch changes will disappoint families who face huge Inland Revenue bills in the next few years with the death of parents and grandparents.

Under the new rate, anyone who inherits an estate worth more than [pounds sterling]275,000 starts paying tax at 40 per cent.

A decade ago, only the wealthy had to pay, but now even a modest home in the South-East is worth more than [pounds sterling]275,000.

Critics argue that the threshold should be set far higher and that if it had risen in line with house prices, it would now stand at [pounds sterling]390,000. However, this would cost the Chancellor [pounds sterling]1 billion.

Financial advisers claimed the Chancellor is still turning a blind eye to what has become a wealth tax on hardworking middle England.

Simon Rees, tax manager at accountants PWC, said: "Inheritance tax in its current form is manifestly unfair and indiscriminate. It doesn't matter if you have built up your wealth from income which has already been taxed, or from capital gains which have also been taxed, you still get another slice taken.

"It really does need looking at.

"Where are we going with this tax?

Who are we trying to tax and why? …

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