Inheritance tax bill climbs 3% in a year as well-off hand over £3bn
Affluent southerners in London and the south east account for half the government's inheritance tax take
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Your support makes all the difference.The cost of handing over wealth to descendants has climbed 3 per cent as Brits are forced to hand-over £3bn a year to the government in inheritance tax. The average death tax bill rose almost £5,000 in a year to £170,000, according to analysis of HM Revenue and Customs data. But only a tiny minority of people fall foul of the tax laws when they die as their estates are too small. HMRC reviewed nearly 280,000 estates in the 2012-2013 tax year, the latest year for which information is available, but inheritance tax was paid by just six per cent – 17,900 estates.
Unsurprisingly the bulk of people hit by the tax were based in the prosperous south. In fact London and the south east accounted for half of all inheritance tax payments in the year. And average inheritance tax bills among well-heeled Londoners were much higher at almost £236,000 – 38 per cent more than the national average.
But the analysis also revealed a trend of growing wealth in Northern Ireland and the north east of England with the average inheritance tax bill climbing a quarter and a tenth respectively. But there were just 200 estates liable for the tax in Northern Ireland while four individual counties in the London commuter belt in south east England each saw more than double that figure. Surrey had almost four times as many with 970, while Hampshire had 620, Kent 560 and West Sussex 510.
On the other hand it pointed to shrinking fortunes in Scotland and Wales with the average bill in Scotland dropping almost nine per cent and in Wales by five per cent.
Les Cameron, a tax specialist at Prudential, the company behind the analysis, said: “As the total amount of inheritance tax paid increases, so does the value of careful tax planning for anyone looking to cascade as much of their wealth to their families as possible.”
However the inheritance tax bill looks set to ease in the coming years. In the July’s Budget, George Osborne announced that from April 2017 individuals will be entitled to a family home allowance in addition to the existing £325,000 inheritance tax allowance. It will be phased in and will be up to £1m for a married couple or civil partnership by the 2020-21 tax year.
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