IHT Bills Are Hitting Six Figures in Some Parts of The UK

Once a tax which only affected the truly rich, IHT now hammers anyone who has done well and owns property in thr SE of England. Here’s the word;

New research from The Private Office reveals that inheritance tax (IHT) liabilities are reaching six figures across large parts of the UK in 2026, as rising property values continue to push more estates above the tax threshold.

The analysis shows that 136 local authorities are already exposed to inheritance tax in 2026, with estimated average liabilities ranging from just over £150 to more than £340,000 per estate.

London dominates highest inheritance tax bills

Kensington and Chelsea ranks as the UK’s most expensive inheritance tax hotspot, where:

• The average property value is £1.18 million

• The estimated IHT liability reaches £343,924 per estate

• Total average estate values exceed £1.3 million

Other London boroughs, including Camden, Richmond upon Thames and Hammersmith and Fulham, also show projected tax bills well into six figures. Beyond the capital, affluent southern areas such as Elmbridge, St Albans and Windsor and Maidenhead remain firmly within taxable territory, reflecting sustained house price growth across commuter-belt locations.

North vs South Divide in Inheritance Tax Exposure

The data reveals a pronounced regional imbalance in inheritance tax exposure across the UK in 2026, with liabilities heavily concentrated in London and the South East.

Southern England dominates the rankings, with many local authorities recording average inheritance tax liabilities well into six figures. In contrast, northern England features very limited exposure at higher levels, with only a small number of areas approaching the tax threshold.

Trafford is the only northern authority appearing in the dataset, with an estimated average inheritance tax liability of around £20,814, significantly below the levels seen in southern hotspots.

More estates to be caught as pension rules change

From 6 April 2027, most unused pension funds and death benefits will be included within an individual’s estate for inheritance tax purposes. Historically, pensions have sat outside IHT calculations.

By combining average property values across 372 local authorities with estimated pension wealth, the research indicates that 152 areas previously below the threshold could become liable, bringing the total number of exposed local authorities to 288.

Frozen thresholds drive rising tax bills

The inheritance tax nil-rate band remains fixed at £325,000 until 2030/31, while the residence nil-rate band can increase the threshold to £500,000 when passing a home to direct descendants.

However, continued house price growth means more estates are exceeding these thresholds. Across the UK, inheritance tax receipts have already reached £8.25 billion in 2024/25 and are projected to exceed £9 billion by 2026/27.

“Inheritance Tax Is Increasingly Becoming a Property Tax”

Pippa Vick – Financial Adviser at The Private Office (TPO), said:

“Inheritance tax is increasingly becoming a property tax by default. Many families don’t consider themselves wealthy, yet long-term house price growth – particularly in London and the South East – means their estates can face substantial tax bills. Without proper planning, beneficiaries may be forced to sell assets simply to settle the liability. Early advice and structured estate planning can significantly reduce the eventual tax burden.

Pensions have long sat outside inheritance tax calculations, so bringing them into scope has a major regional impact. In high-property-value areas, the effect is dramatic, but even in more affordable regions, families who previously expected no inheritance tax may now face a bill. Planning early will be crucial.”

Interactive tool highlights future tax exposure

To help individuals understand their potential liability, The Private Office has developed an inheritance tax calculator that estimates how bills could change by 2027 based on property values and pension wealth.