Brown 'cashing in' with inheritance tax

The Tories today accused Gordon Brown of cashing in on soaring house prices by snaring families with inheritance tax.

They released figures claiming tens of thousands more people are now being caught by the tax when their parents die than when Labour came to power.

Inheritance tax is charged at a flat 40 per cent on estates worth more than £263,000. But while house prices have risen by 130 per cent since 1997, the taxexempt ceiling has only gone up by 22 per cent.

Shadow chancellor Oliver Letwin said in 1997 only one housing hotspot - Gerrards Cross in Buckinghamshire - showed average prices running higher than the threshold after which inheritance tax was paid.

For the typical family in other areas, no tax was paid on the estate.

Now the number of towns where property values exceed the tax-free ceiling has rocketed to 86, Mr Letwin claimed. The effect was that families with relatively modest homes were paying 40 per cent tax on legacies.

According to the Halifax, the average semi-detached home in the South-East is now worth more than £339,800, making the owner liable for a bill of £30,720.

An average detached home in London worth £579,800 would attract an inheritance tax bill of about £126,720.