IHT bill tops £662m in South East

More estates in the South East paid inheritance tax (IHT) than in any other region of England, according to new analysis of HM Revenue & Customs data.

The research, issued by Prudential on 21 February, was based on the latest publicly available data on tax receipts, for the financial year 2010-11.

In that year, inheritance tax was paid on 15,600 UK estates, which faced a total bill of just under £2.6 billion. The average amount per estate was £165,700.

London and the South East of England accounted for as much inheritance tax revenue as the rest of the UK put together, even though only 42 per cent of liable estates were in the two regions.

The average amount paid in IHT stood at £174,200 in the South East and £234,400 in London as a result of higher property values in these areas. However, in the South East 3,800 estates paid inheritance tax compared with 2,700 in London.

In contrast, in the North East just 200 estates paid a total of £26 million, an average of £130,000 per estate.

The figures suggest that only six per cent of estates paid IHT in 2010-11 but with property prices rising again – and the nil rate IHT band, below which no inheritance tax is paid, frozen at £325,000 until 2017-18 – many more estates could find themselves subject to inheritance tax.

Lee McClellan, a partner in Palmers’ Will<!–>s, Trusts and Probate team, whose expertise includes inheritance tax planning, said: “One financial and business advisory firm has already recently predicted that the number of estates affected by IHT annually will rise from an estimated 21,000 in 2012-13 to 42,000 in 2016-17, as a result of the housing market recovery pushing up property prices.

“Expert advice and early planning are key steps to mitigating future IHT and seeking the advice of legal professionals experienced in estate planning is likely to be a worthwhile investment. For more information, please contact our Wills, Trusts and Probate team.”