One in every 20 households in London is worth £1 million or more, according to research today.

The Centre for Economics and Business Research (CEBR) said soaring house prices had led to a surge in the number of people with assets worth more than £1 million in the past decade.

Inland Revenue figures estimated there were about 230,000 millionaires in the UK in 2001. But the CEBR said today's figure was likely to be nearly double that, at 425,000, following a 64 per cent jump in house prices since 2001.

The group estimates that 175,000 or 41% of the country's millionaires live in the capital, where they account for 5.5% for all households.

And it estimates a further 90,000 households in the South East have accumulated wealth of more than £1 million.

But the group warned that the sharp rise in household wealth could lead to the Government looking to increase tax on homes.

It said one of the options was to increase the rate of stamp duty on properties bought for more than £500,000 from its current rate of 4%, but this was likely to be very unpopular, as was imposing a capital gains tax on the sale of the family home.

Think tank the Institute for Public Policy Research recently suggested raising the rate at which inheritance tax is paid to 50% from 40% on assets worth more than £763,000.

But Douglas McWilliams, chief executive of CEBR, said this would be unfair as it was a tax that would primarily be levied on people in the south of the country.

He added that with the abolition of mortgage interest relief, people had already paid for their houses through post-tax income, and should not be taxed on them for a second time.

Thursday August 26, 2004