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More Brits hit by inheritance tax

londonpropThe inheritance tax threshold in the UK is being quickly outstripped by rising house prices.

As a result, tens of thousands of families could be affected in the coming five years.

The number of estates by the tax was 21,000 last year, but this is expected to double to 42,000 by 2017.

The allowance on inheritance tax was frozen at £325,000 in April 2011. This level will stay fixed until April 2018.

During the coming years, this value is likely to be eroded as house prices are going up quicker than had been predicted by the Treasury.

Prices are now expected to rise as much as 25% by the end of 2018. The Chancellor’s frozen rate will affect 176,000 estates in that time.

The jump in house values has taken economic forecasters by surprise.

In March, the Office for Budget Responsibility said house prices would rise by 1.6% in 2014. Some estate agents, on the other hand, believe the hike could be as much as 6.5%.

The recent revival in the housing market is likely to continue to force more people into inheritance tax territory.

The Treasury said: "Over 96% of all estates do not have to pay inheritance tax. Since 2009, the value of core estate assets such as domestic property has fluctuated significantly. Despite this, the number of estates paying tax has remained at less than 4% for over four years."

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