As inheritance tax bills continue to increase for families across Great Britain at an alarming rate, one London Borough is paying a particularly high price.
In fact, an analysis by the Telegraph unveiled this singular borough is paying more inheritance tax than two countries, Wales and Northern Ireland.
The London borough in question is Barnet, which according to HMRC statistics, saw grieving families in this area fork out £104milllion in the 2019/20 tax year.
This ultimately contributed to London’s wider bill, which unsurprisingly topped the list of areas with the largest inheritance tax paid in the 2019/20 tax year at £1.3billion.
The South East of England followed closely behind London, accounting for a staggering £1.1billion of the total inheritance tax liability.
A typical home in Wales and Northern Ireland costs an average of £214,000 and £172,000 respectively, Office of National Statistics data shows.
READ MORE: Inheritance tax – Millions warned of gifting rules when giving to family
In contrast, only £97million was paid by residents in Wales in the same tax year, while £42million was paid by residents in Northern Ireland.
According to HMRC, London and the South East’s bills represented 55 percent of the IHT liability for England and 47 percent of the IHT liability across the whole UK. The average tax bill in London amounted to just over £300,000.
Wales and Northern Ireland, along with the North East of England, on the other hand, represented the lowest number of taxpaying estates.
HMRC attributed this to the possibility of lower house prices in these regions and therefore lower values of wealth transfers that fell above the tax-free allowances that triggered a tax charge.
Meanwhile, the statistics show London’s average house prices remain the most expensive of any region in the UK, with an average price of £523,000.
Average house prices in the South East reflect a more modest – but staggeringly high – £394,543.
The main inheritance tax threshold (nil-rate band), which is the total amount of a person’s estate that can be passed on to beneficiaries, has been frozen at £325,000 since 2009.
The residential nil rate band, which was introduced in April 2017, reduces the amount of inheritance tax a person might pay when passing on their main residence to a “direct descendant”.
This currently sits at £175,000 and like the more general nil-rate band, will remain frozen until 2028 – despite exponential house price growth.
Speaking on HMRC’s latest update on inheritance tax receipt, which showed the Government body raked in up to £0.6billion in receipts for April 2023, Andrew Tully, technical director, Canada Life said: “The Government’s proverbial golden goose looks set to continue to deliver. Inheritance tax receipts have eclipsed the same period as last year by 20 percent, indicating that we are in for another record-breaking year.
“The reality is that if house prices continue to rise, and with the nil rate band of £325,000 frozen until 2028, more families will be facing a hefty bill from the tax man.”
However, he added: “There are perfectly legitimate ways of reducing your estates’ inheritance tax bill, for example through the use of gifting, setting up trusts, or setting up a will with a charitable beneficiary.
“Inheritance tax should no longer be viewed as a tax on the wealthy, and proper financial planning well in advance can help avoid being blindsided at the eleventh hour. Seeking professional financial advice will ensure you’re best equipped to navigate the tax system.”
