Trebling house values since 2000 have drawn even more tax payers into the IHT net with those in London and south east hit hardest by inflation of house prices, data gathered by Just Group has shown.
Property wealth accounted for more than two fifths (42%) of inheritance tax paying estates in London, an HMRC Freedom of Information request by the retirement specialist.
According to the data, the average value of property in London was more than £809,000.
Just Group said the average value of estates in the capital liable for IHT in 2021-22 was more than £1.9 million, nearly £300,000 higher than the South East which was the region with the second highest average estate values (£1.6 million) and £750,000 more than the North East which was the region with the lowest estate values.
The FOI revealed that the value of housing wealth in IHT-paying estates was 40% in the South East, 38% in the East of England, 38% in the South West, 33% in the West Midlands, 32% in the North West and 30% in Wales.
In the East Midlands, the North East, Scotland, Yorkshire & Humber and Northern Ireland, property wealth was under 30% of the value of the average IHT-paying estate. Cash and securities make up a far larger proportion by value of the average estate in the majority of these regions, although significantly less estates were liable for IHT across those areas.
Stephen Lowe, group communications director at Just Group, said: “When it comes to estates that pay inheritance tax the figures speak for themselves. Average prices in the UK have more than trebled since 2000 with those living in London and the South East particularly impacted due to average property prices being far higher than the rest of the country.”
Lowe said the introduction of the residence nil-rate band in 2015 reduced the IHT due for some of those leaving property to a direct descendent, but the threshold has been frozen at £175,000 since 2021 while house prices have risen a further 15%, resulting in more people being dragged into the net.
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