Peter Jackson column

Mar 23 2006 By Peter Jackson, The Journal

Benjamin Franklin told us what to expect when he said: "Nothing can be said to be certain, except death and taxes."

Nothing encapsulates this truth better than Inheritance Tax, IHT, levied on the wealth of the dead.

The most interesting aspect of this year's pre-Budget speculation was a survey, which showed a majority of people favouring IHT's abolition - a wish Gordon Brown has chosen to ignore, although he is to raise the threshold to £325,000.

Out of 1,006 people surveyed, nearly 60pc wanted it to be scrapped, even if it meant paying more income tax.

Not so very long ago this would have been surprising. I suspect that even those only in favour of a modest redistribution of wealth would have regarded some form of inheritance tax as being the fairest way to achieve that end.

After all, the argument went, inherited wealth is, by definition, unearned wealth and nothing bestows such an unfair advantage in life.

But that has run up against an even more instinctive feeling, namely that a family's assets are collective and belong to the whole family and the younger generations have a right to them as well the older.

Originally in the form of Lloyd George's Death Duty, and for most of the century since, IHT has been seen as a means of clobbering the rich.

But now, with rising house prices, more and more people are finding themselves - or those from whom they wish to inherit - liable.

Whereas four years ago the tax raised just £2.5bn, it is now worth some £3.4bn, twice what it raised in the 1996/97 tax year.

It is estimated that almost half of the homeowners in London are over the current £300,000 threshold for paying IHT, a third in the rest of the South and nearly a quarter in the North.

The way forward is perhaps The Halifax's suggestion that the tax be linked to house price inflation.

If it had been over the past 10 years, the threshold would currently be £406,600.