The IHT threshold has risen by 85 per cent since 1995 from £154,000 to £285,000 in March 2006. There was a 30 per cent rise in April 1996 from £154,000 to £200,000. Since then, the IHT threshold has broadly risen in line with the Retail Prices Index (RPI).
House prices have risen by 176 per cent over the past 10 years, says Halifax. The average price now equates to 62 per cent of the IHT threshold, compared with 40 per cent ten years ago.
Halifax projects that the revenue collected by the Exchequer from IHT could rise to £5.5 billion a year in todays money by 2020. That is a 244 per cent increase from £1.6bn received in 1996/97 the last time the IHT threshold was raised significantly.
The IHT threshold would now be £425,000 if linked to house price movements over the last ten years, says Halifax. At present the IHT threshold is projected to rise very gradually to £325,000 by 2009/10.
