Average house price in 236 postcode districts is above the inheritance tax threshold
Halifax calculates that the number of postcode districts where the average house price is above the inheritance tax (IHT) threshold has more than doubled in the past five years. The average house price in 236 (11%) postcode districts in England and Wales is now above the IHT threshold compared to 117 (6%) postcode districts five years ago in 2001.
Sales above the inheritance tax threshold accounted for at least 25% of property sales in 423 (20%) postcode districts across England and Wales in 2006, compared with 230 (11%) districts in 2001. They include 54% of London postcode districts and 40% of postcode districts in the South East. All regions of England and Wales have postcode districts with more than 25% of home sales above the IHT threshold.
There are 22 postcode districts which have seen at least a 25% increase in the proportion of home sales above the IHT threshold and 16 of these districts are outside London and the South East. The largest increase in the proportion of housing sales above the inheritance tax threshold over the past five years has been in NE20 in Newcastle, up from 22% to 61%. This was followed by PL28 in Padstow with a 39% increase and EC2Y in the City of London, also with a 39% rise.
There are postcode districts with average house prices above the IHT threshold in all English regions, apart from Yorkshire & the Humber. 36% of postcode districts in London have an average house price above the inheritance tax threshold of £300,000, while 25% of postcode districts in the South East are priced above the IHT threshold.
Since 1995/96 house prices across the UK have increased by 199%, more than double the increase in the IHT threshold, up 95% to £300,000 for 2007/08. If the threshold had increased in line with house price inflation since 1995/96, it would be now be at a level of £460,000, more than 50% above the 2007/08 £300,000 IHT threshold
Tim Crawford, Group Economist at Halifax, said: "The potential reach of inheritance tax is extending year by year across the country. There has been a doubling in the number of postcodes where the average house price is now above the threshold in the past five years. There are 2.3 million properties in the UK valued at more than the inheritance tax threshold. We call on the government to raise the inheritance tax threshold to £460,000. That would account for the significant rise in house prices over the past eleven years. We also call on the government to commit to increase the inheritance tax threshold in line with house price inflation in the future."
