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Are people in your area paying the most inheritance tax?

We look at who’s paying the most inheritance tax in the UK and offer some ways to potentially lower any inheritance tax bill.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Inheritance tax (IHT) is a great earner for the Treasury. The government collected £2.7bn in IHT receipts from April to August in 2021, an increase of £0.7bn from the year before.

The next few years could see that amount creep up further. The nil-rate band of £325,000 has been frozen until 2026, and the Office for Budget Responsibility forecasts that receipts will grow every year, hitting over £6bn for the first time in 2023.

But the average bill varies across the UK. London and the South East stand out as paying above average.

Are people in your area paying more or less than the UK average?

Cases Total bill (£) Average bill (£)
UK average 22,100 4,630,000,000.00 209,502.26
London 4,010 1,090,000,000.00 271,820.45
South East 4,930 1,060,000,000.00 215,010.14
South West 2,590 524,000,000.00 202,316.60
East of England 2,520 504,000,000.00 200,000.00
Scotland 1,190 233,000,000.00 195,798.32
West Midlands 1,260 226,000,000.00 179365.08
East Midlands 929 166,000,000.00 178,686.76
North East 347 61,000,000.00 175,792.51
Yorkshire and the Humber 979 171,000,000.00 174,668.03
Northern Ireland 252 40,000,000.00 158,730.16
Wales 654 102,000,000.00 155,963.30
North West 1,380 211,000,000.00 152,898.55

Source: HMRC Inheritance Tax Statistics, 2018/19 tax year (the most recent regional figures available).

Some ways to reduce an IHT bill

The first step is to get to grips with the basics. There are lots of simple steps you can take to pay less IHT.

For example, gifting can be a great way to give children or grandchildren a great start in life, while reducing the future value of your estate for IHT purposes.

Everyone has the following tax-free allowances for making gifts:

Annual exemption – in each tax year, you can make gifts up to the annual exemption of £3,000. On top of this, any unused exemption from the previous tax year can also be used – so up to £12,000 per couple can be gifted in this way in a year.

Gifts from income – you can make regular gifts out of income which will be completely exempt from any future IHT liability. These gifts must be from your post-tax income, made habitually, and leave you with enough income to maintain your standard of living.

Marriage gifts – parents and grandparents can make one-off gifts on the marriage of children or grandchildren (up to £5,000 and £2,500 respectively). If you aren’t a parent or grandparent, you can still use this exemption to gift up to £1,000.

Small gifts – in each tax year you can gift up to £250 to any number of people, as long as they haven’t received a gift which uses another exemption.

Donations to charities or political parties – gifts to these types of organisation, either during your lifetime or via your will, are exempt from IHT.

You can find more expert hints and tips in our guide to saving Inheritance Tax.

Download your copy

Want to talk it through?

If you think you could be affected by IHT, one thing is certain, the sooner you act, the better placed you are to reduce the potential impact.

What happens to your wealth after you're gone is a sensitive topic. Knowing you could save your loved ones tax could be some weight off your shoulders.

Start by booking a call with our advisory helpdesk. They'll help you understand whether advice could be right for you. If it is, we'll book your free initial consultation with a specialist financial adviser.

There's no pressure to take advice, but if you do, there’ll be charges, which we'll discuss with you.

With careful financial planning, our advisers can help you with your IHT planning. They can also help you understand how tax rules apply to your personal circumstances, but for complex tax calculations, we recommend speaking to a tax specialist.

Find out more about IHT advice at HL

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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