Timely news for home owners

Oct 10 2007 Liverpool Daily Post

THE Government is no doubt congratulating itself today on an initiative that is bound to be a vote winner. Chancellor Alistair Darling’s announcement that the inheritance tax threshold would be doubled for married couples and civil partners to £600,000 – rising to £700,000 from 2010 – is good news.

The new allowance is worth more than the value of 97% of homes in the country and, crucially, the Government also stated both house prices and inflation would be taken into account when setting the inheritance tax threshold in future.

Of course, it is an announcement that is long overdue, and one prompted by concern at flagging popularity in the polls, rather than genuine desire to correct an unfair levy.

The plan was unveiled with suspicious alacrity, after the Tories promised at their annual conference to exempt estates under £1m from inheritance tax.

But the previous threshold – charged at 40% on all assets worth more than £300,000 left behind by an individual – was far too low, given the on-going house price boom.

It is estimated that more than 2m homes in the UK are worth more than the individual £300,000 threshold, while research claims that one in four households have total assets above this level.

Too many elderly homeowners will have been troubled by the idea that vast chunks of money would be handed over to the Government through inheritance tax.

With no real end in sight to increasing property values, despite the credit crunch, the old level of tax was fostering resentment and targeting Everyman, rather than those who were genuinely wealthy.

Ultimately, whatever the genesis, this announcement is good news for those who have seen their property values soar in recent years – and good news for their families as well.