Halifax research calculates that almost one in three (31%) detached property sales in the UK are now above the current inheritance tax (IHT) threshold of £275,000. In addition, the average price of a detached property in the UK is currently £270,107, only 2% beneath the current IHT threshold.

Five years' ago, only 13% of detached property sales were above the then threshold of £234,000. In London and the South East, the majority of detached property sales occur above the IHT threshold - 86% of transactions in London and 62% in the South East.

Semi-detached properties in the South at risk

In London and the South East, more households with semi-detached properties are also potentially at risk of paying inheritance tax. Nearly half (46%) of semi-detached houses sales in London are above the IHT threshold; in the South East, more than one in eight sales (14%) are above the mark. In 2000, only 26% of semi-detached sales in London were above the then IHT threshold, while the percentage was only 5% in the South East in 2000.

At a county level, Halifax calculates that the average detached house price is now above the IHT threshold in close to one in three counties (25 of the 89 surveyed). Additionally in more than one in three counties (38 out of 89 surveyed), at least 25% of detached house sales are above the IHT threshold of £275,000.

Inheritance tax revenue on a par with beer and cider duty revenues

According to the government's own estimates, inheritance tax revenue in 2005/06 is projected at £3.4bn. This is higher than anticipated revenues from capital gains tax (£3.0bn) for 2005/06 and petroleum revenue tax (£1.5bn). It is on par with government revenues from beer and cider duties (£3.4bn).

Some other findings:

• Sales above the inheritance tax threshold accounted for at least 50% of detached house transactions in 10 (11%) counties. Six of these were in London and the South East. The other four were Berkshire (76%), City of Edinburgh (67%), Buckinghamshire (61%) and Oxfordshire (57%).
• Sales above the inheritance tax threshold accounted for at least 25% of detached house transactions in 38 (43%) counties.
• The average price of a detached property is above the inheritance tax threshold of £275,000 in almost one in three counties or 25 of the 89 surveyed.
• Sales above the inheritance tax threshold accounted for 25% of Semi-detached house transactions in 4 (4%) counties. These are London (68%), Middlesex (41%), Surrey (38%) and Hertfordshire (27%)
• The average price of a semi-detached property is above the inheritance tax threshold of £275,000 in three counties surveyed – London (£465,752), Middlesex (£294,819) and Surrey (£282,258)

Halifax is calling on the government to link the threshold to house price inflation. "Five years ago only one in eight detached house sales were above the threshold," said Martin Ellis, chief economist at the Halifax. "According to our figures, the inheritance tax threshold would be raised to £406,600 if it were increased in line with the increase in house prices over the past ten years."