Property makes up nearly half of the wealth in estates paying inheritance tax in London, according to Just Group.
A Freedom of Information request from the retirement specialist to HM Revenue and Customs showed that in 2022/23, property accounted for 47% of the wealth in estates paying IHT in the capital, with the average property value exceeding £862,000.
The average estate value in the capital was over £1.6 million, nearly £400,000 higher than the East of England, which held joint second highest average estate value with the South East.
In comparison, property wealth makes up around a quarter of the value of the average IHT-paying estate in Scotland (24%), Northern Ireland (25%) and the North East (26%). Cash and securities make up a far larger proportion of estates in regions other than London, East and South East, although substantially fewer estates are liable for IHT outside those three areas.
David Cooper, director at Just Group, said: “The introduction of the residence nil-rate band in 2015 reduced the IHT due for some of those leaving property to a direct descendant but the threshold has been held at £175,000 since 2021.
“With asset prices continuing to grow and the IHT regime seeing a significant tightening in the Autumn Budget 2024, it’s likely more people will be dragged into paying the tax through the value of their property.
“Estate planning is a complex area that can benefit from professional financial advice. A professional adviser can help people who want to manage their estate in an efficient way and ensure as much as possible can be passed on to loved ones.”
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