A large number of middle-class Londoners are being affected by inheritance tax (IHT) because of rising property prices and the freeze on IHT allowance, according to an article by the Telegraph.
Homes valued at £325,000 or above qualify for IHT and the number of such properties has jumped by 50% in the past five years. The ten locations that have seen the highest IHT payments are all found in London and the south-east. London's Barnet borough has taken the biggest hit, with 240 citizens paying IHT in 2010/2011.
Barnet does not have the most expensive properties in the British capital, the Telegraph noted, citing a source from real estate firm Savills. Last year, 58% of houses in the borough were sold at a price of £325,000 or more as opposed to 96% of those found in Chelsea and Kensington. However, Barnet does have an older population in comparison to other boroughs, the source said.
Other local authorities with ? higher proportion of houses eligible for IHT include Wiltshire, Bromley, Richmond, Cornwall, Wandsworth and Westminster.
Having to pay IHT and possibly even Labour Mansion Tax would be a double blow for hard-working households, Finchley and Golders Green MP Mike Freer told the Telegraph. People who have made sacrifices to save money for a house are being punished for doing so, as it were, he said.
Considering the value of property and the pattern of rising property prices, the growing IHT burden weighs the heaviest on London and the south-east, said a Savills spokesman. An increased number of households are likely to be impacted by IHT unless thresholds are lifted, he added.