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Press watch: Middle class families braced for inheritance tax time bomb

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According to the Telegraph (14 June), the number of families hit with inheritance tax bills will rise by one third this year, according to figures that show the full extent of Britain’s death tax time bomb.

Treasury forecasts suggest that rising house prices and the recovering economy will push tens of thousands more people over the £325,000 threshold for paying the duty. This means the number of families required to pay tax on the estates they inherit will increase by 35% to 35,600 during the course of this financial year, a Sunday Telegraph analysis shows. Next year, the number of families liable for the duty will increase again to 43,800. A total of 236,000 families will have to pay the tax over the next five years.

Inheritance tax is levied at a rate of 40% on the value of an estate above the threshold. Economists, tax experts and Tory MPs have called for radical reform, warning that growing numbers of middle-class families are being trapped as house prices rise. A typical property in London is worth more than £450,000.

The Sunday Telegraph’s analysis, which was verified by the Office for Budget Responsibility (OBR), the Treasury’s official economic forecaster, will reignite the debate over the Conservatives’ election promise to cut inheritance tax.

Issue: 1221
Categories: News , IHT , Private client taxes