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27 Nov 2013

Number Of Estates Paying Inheritance Tax To Double In 2016/2017

The number of British families that will have to pay inheritance tax is going to soar over the next five years, and the total number of estates affected by the tax is set to double from 2012 figures, the Daily Telegraph reported.

In 2012/2013, 21,000 estates fell under inheritance tax rules, but this figure is expected to reach 42,000 in 2016/2017. By contrast, the previous peak registered in 2006/2007 stood at 34,000.

The allowance on tax was pegged at £325,000 in 2011, and this figure will not change before April 2018, which suggests that its value will be gradually falling. Meanwhile, property prices have been rising at a rate that the government had not foreseen. By the end of 2018, house prices are expected to grow by more than 25%, the Telegraph informed.

The Treasury commented by saying that the number of estates that have to pay inheritance tax remains firmly around the 4% mark, and the vast majority of UK families are not charged the levy, despite significant fluctuations in house prices over the past four years.

The increase in residential property prices caught many industry experts by surprise, the news source said. Earlier this year, the Office for Budget Responsibility predicted that house prices will go down by 1.6%, whereas property consultancy Savills estimated that across the UK, prices will rise by 6.5%.

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