Property makes up half the wealth of estates in London paying Inheritance Tax (IHT) – around twice as much as most other regions, an HMRC Freedom of Information (FOI) request from retirement specialist Just Group has revealed.
In 2019-20 (the latest financial year of available data) property accounted for 50% of the wealth in estates in London paying IHT, with an average value of over £820,000.
The average estate value in the capital was over £1.4m, nearly £200,000 higher than the South East which was the region with the second highest average estate values.
The proportion of housing wealth in IHT-paying estates drops to 39% in the South East (£604,000), 36% in the East of England (£524,000), 32% in the South West (£474,000) and 31% in the West Midlands (£398,000) but then falls to a quarter or less in all other regions.
As such, cash and securities make up a far larger proportion of estates in other regions although substantially fewer estates are liable for IHT in these areas. It suggests that high house prices in London and the South East have been largely responsible for pushing more estates into paying IHT.
Stephen Lowe, group communications director at the retirement specialist Just Group, said: “This data was taken from the period up to the outbreak of Covid-19 and house prices rose significantly during the pandemic, with homeowners over the age of 55 benefitting from £1bn of property value growth every single day between March 2020 and June 2022.
“This is likely to have tipped many more estates over the IHT threshold, perhaps without the homeowners even realising. It is another reminder of why it is so important that people regularly assess the value of their estate, including an up-to-date valuation of their property.”
