Recent newspaper articles have highlighted statistics that show where the burden of inheritance tax liability falls.
The statistics for 2017/18 showed that the number of estates actually paying inheritance tax fell for the first time in a number of years, but also that the vast majority of estates where inheritance tax was due came from those who were resident in London and the south-east.
In fact, the administrative area which produced the highest receipts for inheritance tax that year was Surrey, which generated £259 million from 1,100 cases. This was an average tax liability for those families of £234,000 each. In comparison, the inheritance tax generated from the whole of Scotland, where there were 1,032 cases in the same period, was £209 million.
Hertfordshire produced the next highest returns with £157 million and then Sussex with £155 million.
London boroughs accounted for the highest proportion of estates that resulted in an IHT charge. In Wandsworth for example, 15.1% of estates resulted in an inheritance tax liability for the family, followed by 14.56% of estates in Kensington & Chelsea and Hammersmith & Fulham and 14.38% in Barnet.
Kensington & Chelsea alone produced £140 million of inheritance tax, even though it has the lowest population in London, outside of the City.
The main reason for the high inheritance tax yield from London and the south-east is thought to be the average property prices throughout the area.
These figures help to illustrate why it can be so important to consider inheritance tax planning both during your lifetime and as part of the process of drawing up your Will, as this can help you maximise the available exemptions and reliefs, particularly for those who are married or in a civil partnership.
Colman Coyle has considerable experience in advising in relation to lifetime tax planning and the preparation of wills, and if you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or Patrick.Green@colmancoyle.com.