Inheritance tax payments see significant fall
The decline in house prices has had a dramatic impact on the level of inheritance tax that is being paid.
Figures from HM Revenue and Customs (HMRC) have revealed that only 12,000 households will face an inheritance tax bill this year, the lowest number since 1938.
The current inheritance tax threshold is £325,000, but the proportion of estates paying inheritance duties looks set to drop by 25 per cent.
Falling house values are part of the reason for the decline, although other factors include stock market volatility and the Chancellor’s announcement in 2007 that married couples and civil partners can transfer unused allowances to each other.
According to HMRC, it is estimated that government income from inheritance tax is due to dip from £2.83 billion to £2.2 billion in the present tax year.
On the back of soaring house prices, two years ago some 27,000 families had to meet inheritance tax charges. Since then however, property values have collapsed by 23 per cent.