Inheritance tax bill tops £3bn as 6% of estates pay average £170k

Inheritance tax (IHT) receipts have gone through the £3bn barrier, while the average bill for an estate is now over £170,000, with 6% of estates liable for the death taxes, finds research by insurance company Prudential

The analysis of HMRC data for 2012-2013 shows IHT was paid on 17,900 estates with a total bill of £3.05bn, 15% more than the £2.65bn total paid in the previous tax year. The average bill went up by almost £5,000.

The figures do not suggest that an increasing proportion of estates are becoming liable for IHT, according to Prudential, which assessed HMRC figures on nearly 280,000 estates in the 2012-2013 tax year.

IHT tax was paid by 6% of estates, a figure that remained relatively flat over the course of five years but is much lower than in 2007-2008 when over 9% of estates were liable.

Prudential’s analysis also confirmed that London and the South East remain the UK’s IHT hotspots – between them they accounted for half of all payments in the 2012-2013 tax year.

Of all the estates above the £325,000 threshold, and therefore liable for IHT, 42% were from London and the South East.

The average inheritance tax bill was also higher in London than anywhere else in the country, with the average amount paid per liable estate totalling almost £236,000, 38% above the national average.

The Prudential analysis revealed some significant fluctuations across the UK in the average increases in IHT bills paid by eligible estates. Between April 2010 and April 2013 the average bill in Northern Ireland grew by a quarter (26%) and in the North East of England by just over 10%. By contrast, in the same time period the average bills in Scotland fell by almost 9%and those in Wales by 5%.

In a further indication of the skewed distribution across the country of inheritance tax, there were 200 estates liable for the tax in Northern Ireland while four individual counties in South East England each saw more than double that figure – Surrey (970), Hampshire (620), Kent (560) and West Sussex (510).

Les Cameron, a tax specialist at Prudential, said: “As the total amount of IHT 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.

‘With all this in mind, it is almost never too early for many people to discuss future financial plans for them and their families with a professional financial adviser.’

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Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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