The UK space paying extra inheritance tax than Wales and Northern Ireland

Jun 05, 2023 at 9:04 PM

As inheritance tax payments proceed to extend for households throughout Great Britain at an alarming price, one London Borough is paying a very excessive value.

In truth, an evaluation by the Telegraph unveiled this singular borough is paying extra inheritance tax than two nations, Wales and Northern Ireland.

The London borough in query is Barnet, which in line with HMRC statistics, noticed grieving households on this space fork out £104milllion within the 2019/20 tax 12 months.

This finally contributed to London’s wider invoice, which unsurprisingly topped the checklist of areas with the most important inheritance tax paid within the 2019/20 tax 12 months at £1.3billion.

The South East of England adopted intently behind London, accounting for a staggering £1.1billion of the overall inheritance tax legal responsibility.

A typical residence in Wales and Northern Ireland prices a mean of £214,000 and £172,000 respectively, Office of National Statistics information reveals.

In distinction, solely £97million was paid by residents in Wales in the identical tax 12 months, whereas £42million was paid by residents in Northern Ireland.

According to HMRC, London and the South East’s payments represented 55 p.c of the IHT legal responsibility for England and 47 p.c of the IHT legal responsibility throughout the entire UK. The common tax invoice in London amounted to simply over £300,000.

Wales and Northern Ireland, together with the North East of England, then again, represented the bottom variety of taxpaying estates.

HMRC attributed this to the opportunity of decrease house prices in these areas and subsequently decrease values of wealth transfers that fell above the tax-free allowances that triggered a tax cost.

Meanwhile, the statistics present London’s common home costs stay the costliest of any area within the UK, with a mean value of £523,000.

Average home costs within the South East mirror a extra modest – however staggeringly excessive – £394,543.

The foremost inheritance tax threshold (nil-rate band), which is the overall quantity of an individual’s property that may be handed on to beneficiaries, has been frozen at £325,000 since 2009.

The residential nil price band, which was launched in April 2017, reduces the quantity of inheritance tax an individual would possibly pay when passing on their foremost residence to a “direct descendant”.

This presently sits at £175,000 and just like the extra basic nil-rate band, will stay frozen till 2028 – regardless of exponential home value progress.

Speaking on HMRC’s newest replace on inheritance tax receipt, which confirmed the Government physique raked in as much as £0.6billion in receipts for April 2023, Andrew Tully, technical director, Canada Life mentioned: “The Government’s proverbial golden goose looks set to continue to deliver. Inheritance tax receipts have eclipsed the same period as last year by 20 percent, indicating that we are in for another record-breaking year.

“The reality is that if house prices continue to rise, and with the nil rate band of £325,000 frozen until 2028, more families will be facing a hefty bill from the tax man.”

However, he added: “There are perfectly legitimate ways of reducing your estates’ inheritance tax bill, for example through the use of gifting, setting up trusts, or setting up a will with a charitable beneficiary.

“Inheritance tax should no longer be viewed as a tax on the wealthy, and proper financial planning well in advance can help avoid being blindsided at the eleventh hour. Seeking professional financial advice will ensure you’re best equipped to navigate the tax system.”