Following a Freedom of Information (FOI) request by Direct Line Insurance, Guildford in Surrey was dubbed the Inheritance Tax capital of the UK after it was revealed that as many as 658 families from the town southwest of London were subject to the tax between 2015 and 2016. On average, each family are said to have paid £231,000 per estate (a total of just under £152 million), more than anywhere else in the country.
However, the report went on to break down the average IHT into regions, where Scotland came out middle of the board; 6th out of 11 UK regions. Scotland was recorded paying IHT on 1,194 estates. This was compared with the highest – Greater London with 5,294 estates paying IHT – and the lowest – Northern Ireland with only 215 IHT-paying estates.
Alongside Guildford, other areas where families pay high IHT include Southwest London, Brighton, Kingston Upon Thames, Reading, and Bristol. The data also showed that families in Kensington and Hammersmith were amongst the highest billed with an average of £390,000. In contrast, the lowest billed in the country were in Watford, Dundee, Inverness, Western Central London, Motherwell, and Wigan where only 31 estates were liable for IHT.
In order for a household to be applicable to pay Inheritance Tax (IHT), the value of their estate needs to be calculated as being worth a minimum of £325,000. Married couples and civil partners are only liable to IHT if their estate is worth a combined amount of £650,000.
Jane Morgan, business manager at Direct Line, has advised that those concerned about large IHT bills should seek professional assistance and how to avoid it:
“Placing a life insurance policy into a trust could avoid payments being included in inheritance tax calculations. However, just 20 per cent of people with a life insurance policy have placed this into a trust and almost a fifth of those with a life insurance policy admit they did not know this was an option.”