July Budget 2015: As inheritance tax system is set to change where will house prices drop below new threshold?
Tomorrow, George Osborne is expected to announce changes to the inheritance tax system (IHT) meaning a couple can hand a £1m estate on to their children without being taxed for the privilege.
Currently, a couple has a tax-free allowance of £325,000 a person (£650,000 a couple).
Although IHT is applied to an entire estate, soaring house prices mean that in some cases the majority is based on the value of the main property.
Chelsea, Westminster and Canada, Westminster North, and Hampstead and Kilburn are the only five constituencies where the average selling price of a property last year fell between the two lines.
No other boroughs come close. The highest-ranked constituency outside London is Esher and Walton, with an average price of £465,000.
But for those living in Kensington – where the average was £1.15m – the new threshold is unlikely to make much difference.
According to ONS data, only five constituencies in the UK have an average house price above that threshold – and they’re all in London. Three are Tory-held seats, and two are held by Labour.
Overall, Labour constituencies (including Scottish Labour and Labour co-op) have a median price (£127,500) only 61 per cent that of Conservative constituencies (£207,625). These figures are averages of averages, which affects the accuracy of the data.
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