Housing raises inheritance tax pain

LIFE assurer Friends Provident claims half a million homeowners have fallen into an 'inheritance tax trap' since the start of the year as house price inflation has pushed the value of their homes above the £263,000 threshold.

The group believes 2.4m homeowners are now liable to the 40% tax. It is launching a Discounted Gift Bond to help cut savers' exposure to the levy.

Friends Provident shares were upgraded to 'outperform' from 'neutral' by CSFB, while its price target was lifted to 153p from 150 following the group's recent interim results.

Friends Provident reported a solid set of half-year figures, the broker said.

Its earnings were helped by the absence of negative factors and better-than-expected new business - which added an additional £3m to earnings, the broker said.

The recent merger between ISIS and F&C is another positive for the group, the broker said.

And risk of dilution from the Friends Provident 15% share issue is offset by the value created from its 51% stake in the merged group, the broker said.