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Inheritance tax – is your area paying the most?

With over £5.1bn being paid in inheritance tax last year, we look at which areas had the highest IHT bills and give some practical tips to help reduce any future IHT bills.

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.

In fact, IHT receipts have nearly doubled over the last decade, with an estimated £5.1bn paid to the taxman last tax year.

The average UK IHT bill stands at a whopping £197,000, but people in London and the South East are paying even more.

It’s a gloomy subject, but it’s often said that death and taxes are the only certainties in life. Unfortunately, thanks to IHT, they have a tendency to turn up at the same time. So it's a good idea to have a plan in place.

This article is not personal advice. If you’re not sure what the right course of action is for you please speak to a financial adviser. Tax rules can change and the benefits depend on individual circumstances.

Areas of the UK paying the most IHT (2017/18)

Area Average IHT bill
UK £197,521
London £245,413
South East £210,325
South West £184,047
East of England £183,459
East Midlands £180,952
Scotland £180,469
Yorkshire and the Humber £167,619
West Midlands £164,444
North West £163,758
Northern Ireland £152,174
North East £146,814
Wales £133,531

How to cut inheritance tax

Most of us want to make sure our loved ones are left at least a little bit better off as a result of our life. The good news is that with our help you could pay less IHT, or even none at all. You could save your loved ones thousands of pounds.

The first step is to get to grips with the basics. There are plenty of simple steps you can take to pay less inheritance tax. You can find expert hints and tips in our guide to saving inheritance tax.

Download your copy

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

Inheritance tax – free gift allowances

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 couples could gift away up to £12,000 this way.

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 income after tax, 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 completely IHT-free, 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 through your will, are exempt from inheritance tax.

Inheritance tax planning with financial advice

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.

Tax rules and benefits are constantly changing, our advisers can make sure you’re up to date and are making the most of your personal allowances, but they aren’t tax specialists.

We won’t waste your time or money. Book your call back and we’ll help you understand whether you’ll be affected, and whether you could take action to reduce it. If it’s right for you, we’ll book your free initial consultation with a financial adviser.

There’s no pressure to take advice, but if you choose to there will be a charge, which we’ll discuss with you.

Book your call to talk to us about IHT

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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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