"The introduction of the residence nil-rate band in 2015 reduced the IHT due for some of those leaving property to a direct descendant but the threshold has been held at £175,000 since 2021 while house prices have risen a further 15%, so it’s likely more people are being dragged into paying that tax through the value of their property"
- Stephen Lowe - Just Group
An HMRC Freedom of Information request from retirement specialist Just Group reveals that in 2021-22 (the latest financial year of data available) property accounted for 42% of the wealth in estates paying IHT in London, with the average value of the property being more than £809,000.
The average value of estates in the capital liable for IHT was more than £1.9 million, nearly £300,000 higher than the South East which was the region with the second highest average estate values (£1.6 million) and £750,000 more than the North East which was the region with the lowest average estate values (£1.2 million).
The value of housing wealth in IHT-paying estates drops to 40% in the South East (£658,000), 38% in the East of England (£566,000), 38% in the South West (£565,000), 33% in the West Midlands (£440,000), 32% in the North West (£417,000) and 30% in Wales (£369,000).
FOI request from Just Group to HMRC for the Asset Breakdown by Region for Taxpaying Estates in 2021-22 – latest available data
In the East Midlands, the North East, Scotland, Yorkshire & Humber and Northern Ireland, property wealth made up less than 30% of the value of the average IHT-paying estate. Cash and securities make up a far larger proportion by value of the average estate in the majority of these regions, although substantially fewer estates are liable for IHT in these areas.
Stephen Lowe, group communications director at the retirement specialist Just Group, said: “When it comes to estates that pay inheritance tax the figures speak for themselves. Average house prices in the UK have more than trebled since 20002, with those living in London and the South East particularly impacted due to average property prices being far higher than the rest of the country.
“The introduction of the residence nil-rate band in 2015 reduced the IHT due for some of those leaving property to a direct descendant but the threshold has been held at £175,000 since 2021 while house prices have risen a further 15%, so it’s likely more people are being dragged into paying that tax through the value of their property.
“Estate planning is a complex area that can benefit from professional financial advice, helping to support individuals wanting to manage their estate in an efficient way that ensures as much of their estate can be passed on as inheritance to loved ones.”
