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The South East: An Inheritance Tax Hotspot

Nov 06, 2018
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.

Vicky Tassell

About the author

Vicky Tassell

Vicky qualified with Nockolds in March 2016 after completing her training contract and is a Solicitor within the Wills and Probate Team. 

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