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Are people in your area paying the most IHT?

We take a closer look at which areas are paying the most inheritance tax and how you could help your loved ones save thousands of pounds.

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.

Inheritance tax has continued to be a great earner for the Treasury.

The most recent figures available from HMRC show the nation owed £4.78 bn relating to one tax years' worth of estates in 2017/2018. That's an average of £197,521 per estate subject to the tax.

These figures show a drop in the number of IHT cases compared to the previous year. But the average is higher, suggesting more IHT was paid per person if they had a liability.

The next five years could see that average creep up further. Although IHT thresholds have been frozen, inflation over that period is expected to bag an extra £985 million in tax.

But the average bill varies across the country.

London and the South East stand out as paying well above average. The biggest increase compared to last year's figures was in the North West where people owed 18% more in IHT per estate.

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

Region Estates Average IHT bill (£s)
London 4360 245,413
South East 5230 210,325
South West 2570 184,047
East of England 2660 183,459
East Midlands 1050 180,952
Scotland 1280 180,469
Yorkshire and the Humber 1050 167,619
West Midlands 1350 164,444
North West 1490 163,758
Northern Ireland 230 152,174
North East 361 146,814
Wales 674 133,531

Source: HMRC, 2017/2018 tax year.

The good news

With our help you could reduce or remove any IHT liability altogether. 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 help pay less inheritance tax. You can find expert hints and tips in our guide to saving inheritance tax, though the guide and this article don't give personal advice.

See our guide to saving inheritance tax

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 a gift 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 in some years you'll be able to give up to £12,000 per couple.

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 you've paid any tax due on it, made habitually, and leave you with sufficient 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're making a gift to someone who isn't your child or grandchild, 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 from you 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 inheritance tax.

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 once 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 you'll be affected by IHT and whether you could take action to reduce it. If it's right for you, we'll book your free initial consultation with a specialist financial adviser.

There's no pressure to take advice, but if you choose to do so charges will apply, which we'll discuss with you.

More on financial advice

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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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