The government’s coffers are overflowing thanks to sky-high house prices – and it’s hitting families in the pocket with HUGE inheritance tax bills.

New data reveals that families in London and the South East are most likely to be landed with the dreaded inheritance tax bill, with the average amount exceeding a staggering £47 million in some areas.

Inheritance Tax Bill Soars

The taxman is predicted to rake in £7.5 billion this year from inheritance tax, an eye-watering 25% increase in just three years.

With Chancellor Rachel Reeves looking for ways to squeeze even more cash out of Brits in the upcoming October Budget, experts warn that time is running out to protect your family’s inheritance.

South East Tops the Charts for Inheritance Tax Payments

According to a recent analysis of HMRC data by law firm Kingsley Napley, the Chichester parliamentary constituency takes the dubious honour of topping the inheritance tax league. A jaw-dropping 153 estates in the area were slapped with inheritance tax bills in the 2021-22 tax year.

But it’s London’s wealthiest neighbourhoods that are really feeling the pinch, with Kensington residents coughing up the most inheritance tax in the entire country. Other affluent areas like Hampstead & Kilburn, Chelsea & Fulham, and South West Hertfordshire are also high on the hit list.

Sophie Voelcker, a partner at Kingsley Napley LLP, explained: “Our latest ranking shows that house prices and the socio-economic demographics of a region are driving up the local IHT costs, so it is perhaps no surprise to see the South East take the medals.”

Beat the Taxman – Expert Tips

The good news? There are ways to protect your hard-earned cash and ensure your loved ones aren’t left with a hefty tax bill.

Here are some expert tips:

1. Make the Most of Your Allowances:

• Every individual can gift up to £3,000 per tax year, completely free of inheritance tax. You can even combine two years’ worth for a tax-free gift of £6,000.
• Wedding bells? You can gift £5,000 to children or £2,500 to grandchildren as a wedding gift, free from inheritance tax.

2. Give Early to Minimise Tax:

• Gifting larger sums is possible, but if you die within seven years of the gift, inheritance tax may still apply. However, the tax rate decreases the longer you live after making the gift.
• For example, if you die three to four years after making a gift, the inheritance tax rate drops to 32%. After six to seven years, it falls to just 8%.

3. Utilise Your Pension:

• Pensions aren’t just for retirement! You can nominate beneficiaries to receive your pension pot if you die before accessing it.
• Importantly, personal pensions are typically exempt from inheritance tax, making them a tax-efficient way to pass on wealth.

4. Seek Professional Advice:

With the inheritance tax situation constantly changing, it’s crucial to seek professional advice from a financial advisor or lawyer. They can help you deal with the complexities of inheritance tax and create a bespoke plan to protect your assets and provide for your loved ones.