An HMRC Freedom of Information request submitted by Just Group found that in the financial year 2022-23, property wealth represented 47% of estates paying the tax in the capital, with the average property value exceeding £862,000.
The average estate value was more than £1.6m, around £400,000 higher than the East of England, which had the second-highest estate value, along with the South East.
In contrast, property wealth accounts for around a quarter of the value of the average IHT-paying estate in other regions, making up 24% in Scotland, a quarter in Northern Ireland and 26% in the North East.
Just Group’s insight found that cash and securities made up a larger share of estates in regions outside of London, the East of England and the South East. However, fewer estates outside of those three areas are liable for IHT.
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Just Group said this suggested that higher house prices in London, the East and the South East were primarily responsible for more estates falling into the IHT scope.
David Cooper, director at Just Group, said: “It is evident that housing wealth in regions like London, the East and the South East makes up a larger proportion of the estates compared to other regions. The average value of property in London estates paying IHT is nearly double that of most other regions across the UK.
“The introduction of the residence nil-rate band in 2015 reduced the IHT due for some of those leaving property to a direct descendant but the threshold has been held at £175,000 since 2021. With asset prices continuing to grow and the IHT regime seeing a significant tightening in the Autumn Budget 2024, it’s likely more people will be dragged into paying the tax through the value of their property.”
In November, the IHT intake totalled £588m.
