Rise in inheritance tax threshold may be frozen
Plans to exclude more homeowners from inheritance tax charges may become a victim of the effects of the recession, it has been suggested.
Press reports have indicated that the Chancellor, Alistair Darling could be considering whether to impose a freeze on the current inheritance threshold in his pre-Budget Report.
At the moment inheritance tax becomes payable at 40 per cent on estates at a value of £325,000 for a single person, climbing to £650,000 for a couple.
These levels were introduced in the 2007 pre-Budget Report with a progressive rise to £350,000 for a single person and to £700,000 for a couple set for April 2010.
However, a ballooning public finance deficit and a drop in government income have put Mr Darling under pressure to raise additional funds.
As a result, he may be obliged to concede that the tax cut is no longer affordable.
The Chancellor’s options could include going ahead with the planned rise to £350,000 and £700,000 but then freezing the increase for a number of years, or dropping the new thresholds altogether and holding them at the present levels.
A Treasury spokesman would not be drawn on the question, saying that all “taxes are kept under review” and that all “policies will be announced in the Budget and pre-Budget Report”.