This number has more than doubled in the past five years, with 25 per cent of property sales going over the £300,000 annual IHT limit in at least 423 postcode districts in 2006.
Unsurprisingly, 54 per cent of London properties and 40 per cent of those in the South East exceeded the limit when sold, and all regions of England and Wales have particular postcode districts where more than a quarter of property sales are over the IHT threshold.
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The biggest increases have been seen in Newcastle (NE20) and Padstow (PL28) where they account for 61 per cent and 49 per cent of sales, respectively.
The top ten most expensive areas are in London with the exception of Virginia Water (GU25). Knightsbridge (SW1X) and Kensington (SW7) are the postal districts with the highest average house prices, where the former comes in at £1,259,050 and the latter at £1,105,491. Alderly Edge in Cheshire is the highest priced area outside of the south of England.
This is a bigger blow for homewoners because the IHT threshold has not experienced the same levels of inflation as the property market itself. Whilst UK house prices have grown by 199 per cent, inflation has only responded by 95 per cent. If it had indeed increased at the same level, the threshold would now stand more than 50 per cent higher at £460,000.
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According to Halifax, this means that the number of properties valued above the IHT threshold now stands at 2.3 million or 12 per cent of all owner-occupied properties. By 2020, if the IHT limit only increases in line with retail price inflation, there could be 4.3 million properties subjected to this hefty tax.
Group economist at Halifax, Tim Crawford, says: The potential reach of IHT is extending year by year across the country. We call on the government to raise the threshold to £460,000 accounting for the significant rise in house prices over the past eleven years. We also call on the government to commit to increase the IHT threshold in line with house price inflation in the future an asset should be taxed at a fair value.
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