Inheritance Tax Hot Spots
London and the South East of England have been identified as the UK’s inheritance tax hotspots by the Prudential analysis. The two regions accounted for as much inheritance tax revenue as the rest of the UK put together. The £1.3 billion in receipts from London and the South East represented half of all the inheritance tax paid nationally, even though only 42 per cent of liable estates (a total of around 6,500) were in the two regions.
Unsurprisingly, given that property values in the capital and the South East of England tend to be higher than elsewhere, the average amount paid in inheritance tax in those areas was considerably more than in other parts of the country. Whereas the average estate liable for inheritance tax in Wales faced a bill of £126,000, and in the North East of England £130,000, the figure for the South East of England was £174,000 and in London, a whopping £234,000.
In both Northern Ireland and the North East of England only 200 estates were liable for inheritance tax, yet many individual counties in the South East of England saw far more estates above the threshold – including Surrey (810), West Sussex (530) and Hampshire (500). HMRC reviewed nearly 260,000 estates in the 2010-2011 tax year, meaning inheritance tax was paid by only 6 per cent of estates, a figure similar to the two previous years. This is much lower than years between 2005 and 2008, when more than 10 per cent of estates were liable for inheritance tax.
Graeme Robb, a tax specialist at Prudential, said:
“These figures reveal that a huge amount of inheritance tax is paid by a relatively small number of people. Nevertheless, it is likely that an average bill of more than £160,000 would be unwelcome for any family.
Many individuals can legitimately reduce their inheritance tax bill through careful tax planning. The help of a professional adviser can be instrumental in ensuring that people can leave more of their wealth to those who they wish to benefit from their legacy.”
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