With property prices increasing at above inflation rates, and outstripping earnings growth, a number of commentators have called on the Chancellor to re-think, or scrap the current regime.
Stephen Herring, tax partner at BDO Stoy Howard, said: “House price inflation, coupled with a threshold that has only tracked inflation has meant that though only raising less than 1 per cent of total tax revenues, IHT is deeply unpopular.”
He added that the IHT exemption threshold could be extended to £500,000, making sure that the tax applied to its designed audience.
However Herring warned the Budget plans should not exempt principal private residence from IHT. He said: “Brown should not merely exempt principal private residence from IHT, which would create economic distortions and stoke house price inflation at the expense of first-time buyers.”
Peter O’Donovan, mortgage manager at Bestinvest, said: “IHT has always been around, but it did not involve 90 per cent of the population until the property boom started. If the government took residential property out of the equation it would make a real difference to peoples’ lives. So many people who have never got into debt are now caught for reasons beyond their control which is very unfair.”
