Using data from HM Revenue and Customs (HMRC), law firm Kingsley Napley has revealed an Inheritance Tax of local authorities up and down the nation. The firm’s ranking covers the expense of bills depending on the number of properties per area and the average value of each estate. In terms of number of properties, the local authority which was levied the most in regards to IHT was Barnet in London.
For the 2018/19 tax year, Barnet had 316 properties which paid Inheritance Tax, with each estate paying around £291,000.
Following the London authority in this list were Wiltshire and the City of Edinburgh, which have a reported 260 and 254 taxed properties in their constituencies.
Comparatively, the local authority which had the greatest overall value for each estate in the UK was Kengsington and Chelsea, also in London.
Those who pay IHT bills in Kensington and Chelsea reportedly pay around £1million, according to HMRC’s figures for the 2018/19 tax year.
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Rounding up the top three of this list is Westminster and Camden which have average Inheritance Tax bills of £818,000 and £441,000, respectively.
However, it is not only estates and properties in London which receive the highest the Inheritance Tax bills.
Among the areas which are included in Kingsley Napley’s ‘Inheritance Tax Premier League’ are Bristol, Stratford-upon-Avon, Winchester, Devon and Dorset.
Across the nation, IHT bills vary from modest amounts in Walsall of £65,000 to staggering amounts of £1million in London.
Within London itself, bills range from £83,000 in Newham to over £1million in Kensington, in terms of local authorities.
James Ward, Head of Private Client at Kingsley Napley, outlined who is most affected by soaring Inheritance Tax bills in the UK.
Mr Ward said: “It’s not simply the wealthiest families that pay the most IHT.
“As our ranking shows some families are better at estate planning than others. With recent property and share price increases and taxes rising elsewhere, IHT remains an area where something can be done to mitigate the eventual liability due.
“IHT is one Premier League you don’t want to be top of.”
Earlier this year, the Government announced it was freezing the £325,000 nil-rate band for Inheritance Tax and £175,000 residence nil rate band until April 2026.
Speculation is rife that the Chancellor may seek to strengthen existing IHT rules in his October Budget in the coming weeks.
This is being discussed as the Treasury is desperately looking for a way to generate more money following the Government’s spending during the pandemic.
However, experts believe there are other tax areas, such as CGT reform, which would provide greater revenues to Rishi Sunak.
As part of his advice to those who are concerned about paying a great deal of money in Inheritance Tax, Mr Ward explained what can be done to rectify the situation.
He added: “Those living in IHT hotspots should strongly consider all of these steps and more to avoid ranking at the top of our Inheritance Tax Premier League in future.
“It is always wise to have a regular review of estates and inheritance plans to ensure tax-efficiency in the event of death.”
According to Mr Ward and Kingsley Napley, here is what those with pending Inheritance Tax bills should consider doing:
- Capital gifting: Sizeable transfers seven years before a person dies.
- Excess income gifting: Regular contributions to school fees or a mortgage can also help.
- Exemptions: Make sure to use all nil rate bands and consider business relief. Although complex, the latter can lead to big savings.
- Life insurance: Consider this being paid out to family members. Let the insurance pay the tax.
- Skiing: Spending the kids’ inheritance! For example, on good wine, nice food, holidays and trips out.