Figures released by HM Revenue and Customs earlier this year showed that the Inheritance Tax paid in the year 2017/2018 exceeded £5 million for the first time ever.
A Freedom of Information Act to HM Revenue and Customs by Direct Line has now revealed the top 10 Inheritance Tax paying areas in the UK:
|Area ||Number of Estates Which Pay IHT ||Average Tax Payable Per Estate |
|North West London ||401 ||£381,546 |
|South West London ||655 ||£346,565 |
|North London ||502 ||£237,052 |
|Guildford ||658 ||£231,003 |
|Kingston Upon Thames ||582 ||£211,340 |
|Tunbridge Wells ||493 ||£202,840 |
|Redhill ||434 ||£183,180 |
|Reading ||413 ||£181,356 |
|Brighton ||585 ||£157,436 |
|Bristol ||396 ||£140,404 |
It has been long acknowledged that Inheritance Tax exemptions have not kept pace with rising house prices, particularly in London and the South East. The ordinary Nil Rate Band (the Inheritance Tax Free allowance applied to an estate) has remained at £325,000 since 2009.
This was eased to a degree last year with the introduction of the new ‘Residential New Rate Band’ also known as the ‘additional threshold’. Those who qualify for the additional threshold will see their overall allowance gradually increase to £500,000 by April 2020. However, for those who do not qualify for additional relief, the £325,000 allowance remains frozen until at least 2020.
The additional threshold could equal Inheritance Tax savings of £70,000 per person provided that it is not lost, wasted or used inefficiently.
To make the most of the relief it is important that consumers ensure that their Will has been properly drafted with the new allowances in mind. This might be by creating a new Will altogether or reviewing existing Wills which were put in place prior to the changes- many Wills which were drafted in light of previous Inheritance Tax rules are no longer suitable in the new regime.
In either case please contact a member of our team to arrange a free informal consultation to see how we can assist.