Inheritance Tax bills hit six figures as houses prices rise, research reveals
Analysis from The Private Office revealed that Kensington and Chelsea ranked as the most expensive area, with an estimate IHT bill of £343,924.
Inheritance Tax (IHT) liabilities are reaching six figures across large parts of the UK in 2026, driven by sustained house price growth, research from The Private Office revealed.
The analysis indicated 136 local authorities are already exposed to IHT, with estimated average liabilities ranging from just over £150 to more than £340,000 per estate.
London accounted for the highest liabilities. Kensington and Chelsea ranked as the most expensive area, with average property values of £1.18m and an estimated IHT bill of £343,924.
Other London boroughs including Camden, Richmond upon Thames and Hammersmith and Fulham also boasted projected liabilities well into six figures.
Outside London, high-value areas such as Elmbridge, St Albans and Windsor and Maidenhead remained firmly within taxable territory.
The data highlighted a clear regional divide, as Southern England continued to dominate higher IHT exposure, while northern areas showed limited impact.
Trafford was the only northern authority in the dataset, with an estimated liability of around £20,814.
The number of affected estates is expected to increase further from April 2027, when unused pension funds and death benefits are brought into scope for IHT.
The research found that this could expand the number of exposed local authorities from 136 to 288.
Frozen thresholds are also contributing to rising liabilities. The nil-rate band remains at £325,000 until 2030/31, with the residence nil-rate band potentially increasing the threshold to £500,000 when passing property to direct descendants.
IHT receipts have already reached £8.25bn in 2024/25 and are forecast to exceed £9bn by 2026/27.
Pippa Vick, financial adviser at The Private Office, said: “Inheritance tax is increasingly becoming a property tax by default. Many families don’t consider themselves wealthy, yet long-term house price growth – particularly in London and the South East – means their estates can face substantial tax bills.
“Without proper planning, beneficiaries may be forced to sell assets simply to settle the liability. Early advice and structured estate planning can significantly reduce the eventual tax burden.
“Pensions have long sat outside inheritance tax calculations, so bringing them into scope has a major regional impact.
“In high-property-value areas, the effect is dramatic, but even in more affordable regions, families who previously expected no inheritance tax may now face a bill. Planning early will be crucial.”
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