Peter Lilley, MP for Hitchin and Harpenden, added his backing to new calls to address the soaring level of inheritance tax. Nationally, Conservatives have outlined possible options to reform and reduce this increasingly unpopular tax. More and more households are now liable for the tax. The tax threshold has been increased by far less than the average rise in house prices since 1997.
The value of the average home in the whole of St Albans District at ?318,700 is well above the threshold for Inheritance Tax of ?263,000. So, the majority of houses in Harpenden would certainly face a significant Inheritance Tax bill.
Peter Lilley said: “After seven years of Tony Blair?s Government, the tax system has become unfair, complex and burdensome. Labour have put up taxes 66 times. Pensioners, homeowners, businesses and families on all income levels are paying more to a Government which is not giving them value for money.
“Once a tax on just the very wealthy, inheritance tax is increasingly a tax on the homes of ordinary families. I believe the tax system should not undermine families? financial security and independence purely because of rising house prices.
“We are consulting on a number of ways in which we can reduce the burden of taxation. I would like to hear the views of local residents across Hertfordshire on how we can deliver better value for taxpayers? money.?
Notes to Editors
Soaring inheritance tax under Labour
The inheritance tax threshold in Britain in 2004-05 is ?263,000. The value of estates (property and assets) above the threshold is taxed at 40%. Since 1997, house prices have risen by an average of 138 per cent, but the inheritance tax threshold has only risen by 32 per cent (up from ?215,000 in April 1997). As a result, due to ?fiscal drag?, more people than ever before will be liable for inheritance tax.
Since most estates will also include other financial assets, many will be liable for inheritance tax even if their property is slightly below the threshold.
Conservative proposals for reform
The possible options recently laid out by Conservatives for reform of inheritance tax are:
1. Abolishing inheritance tax.
2. Lowering the inheritance tax rate, which is currently 40 per cent.
3. Exempting principal residences from inheritance tax.
4. Raising the inheritance tax threshold from the current level of ?263,000
5. Linking the inheritance tax threshold to increases in house prices.
The full consultation document (PDF file) can be downloaded via:
Average house prices in England & Wales (September 2004)
The chart below illustrates average house prices in St Albans District. Any home close to or over ?263,000 will be liable for inheritance tax.
Average Price Detached Semi-Detached Terraced Flat/Maisonette Overall
St Albans ?520,734 ?317,656 ?254,804 ?184,564 ?318,695
Data source: Land Registry