Treasury denies that half UK faces death tax

The Guardian 23/01/2007

The Treasury last night dismissed claims that nearly half of the country faces the prospect of paying inheritance tax because of Gordon Brown's failure to increase the threshold in line with inflation. A spokesman condemned as "scaremongering" reports that the number of estates liable for a 40% tax bill had increased significantly in the past year.

Inheritance tax must be paid on all savings and property when the value of an estate is more than pounds 285,000.

In a report published yesterday, Scottish Widows said massive increases in house prices, coupled with only small rises in the inheritance threshold, meant that 40% of families were now liable. Anne Young, a tax expert at Scottish Widows, said the tax "affects almost half of the country". But the Treasury quickly hit back. "It is misleading and scaremongering to say that inheritance tax 'affects almost half of the country'," said a spokesman.

"The fact is that as a result of increases in the threshold - which will rise from pounds 285,000 to pounds 325,000 by April 2009 - 94% of estates will continue to pay no inheritance tax whatsoever." He added: "The level of the threshold for future years will be set by the chancellor as part of the budget process."

The Scottish Widows report claimed that 1.2 million people plan to give away a total of pounds 103bn in a bid to keep the taxman away from their money. Its research suggests that nearly half of benefactors would like their gift to be used to help relatives get on the property ladder.

"It is really important that people prepare for the possibility of leaving a huge tax bill on their death," Ms Young said.

© Copyright 2007. The Guardian. All rights reserved.
Date: 23/01/2007
Publication: The Guardian