Financial Engineering Network has called for the abolition of inheritance tax on the family home. The fee-based financial planning firm believes the inheritance tax system is flawed and that more family homes are being sold in order to pay the tax bills. A study similar to the Bacon report should be undertaken to examine how the tax system should be changed to address inheritance tax problems, says the firm.

Massive property price increases and the relatively low level of tax exemption have pulled most consumers into the inheritance tax net for the first time. Since inheritance tax is due in cash within three months of the date of inheritance, property assets are more likely to be sold when passed to the next generation. Even if a mechanism is put in place today to pay this tax, assets are likely to increase at a greater rate than inflation - compounding the problem as the years go on. Unless changes are made only two options exist: selling the property or mortgaging it.