Twenty per cent of UK households will be liable for inheritance tax (IHT) by 2020 if the threshold increases in line with the retail price index, the UK's biggest mortgage lender said yesterday.
The Halifax, part of the HBOS banking group, said the number of properties in the UK valued at more than the 2006/07 IHT threshold of £285,000 now stands at 1.5 million, or eight per cent of all owner-occupied properties.
It reckons that this will nearly triple to 4.2 million properties by 2020, or 20 per cent of the total, if the threshold is only increased in line with inflation.
Halifax's estimates about the long run come as a debate about the future of the tax is being questioned, as soaring house prices threaten to bring millions more within the scope of inheritance tax, which was originally designed to target the very wealthy rather than ordinary families.
At the weekend, Blairite Labour MP and former minister Stephen Byers MP said the tax should be scrapped as it works against thrift and enterprise and increasingly penalises middle-income families, especially in London and the south east.
According to Halifax, the Treasury reaped some £1.7 billion in revenue from the tax in the first half of 2006, a rise of £200 million or 13 per cent over the same period last year.
The bank said the amount of IHT collected in the first half of 2006 matched the total in the full financial year 1997/98, Labour's first in power.