Kingsley Napley unveils the ‘Inheritance Tax Premier League’ (ITPL)

An analysis of Government inheritance tax data by law firm Kingsley Napley shows the geographical dispersal of estates hit by inheritance tax bills.
 

Based on the latest HMRC statistics available of inheritance tax (IHT) receipts (see source), Kingsley Napley can reveal:

• Barnet comes top of the league by volume of estates hit by IHT (table 1);
• Kensington and Chelsea leads by average value of IHT paid (table 2);
• Contrary to popular belief, it’s not simply London and the Home Counties that pay higher IHT – Stratford-upon-Avon, Winchester, Devon and Dorset are hot spot areas too;
• Average IHT bills range from £65k in Walsall to over £1m in Kensington;
• Huge range in London from average of £83k in Newham to over £1m in Kensington.

The figures were remarkably consistent with the same analysis for the preceding tax year except:

• Chichester, Leeds and St Albans appear in the top 20 ranking of volume of estates hit by IHT (table 1) unlike in the latest figures;
• South Norfolk, Plymouth and Brentwood appear in the top 20 ranking for average value of IHT (table 2) unlike in the most recent table.

Commenting on the analysis, James Ward, Head of Private Client at Kingsley Napley, says:

It’s not simply the wealthiest families that pay the most IHT. As our ranking shows some families are better at estate planning than others. With recent property and share price increases and taxes rising elsewhere, IHT remains an area where something can be done to mitigate the eventual   liability due. IHT is one Premier League you don’t want to be top of.”

In March this year the Government announced it was freezing the £325,000 nil-rate band for inheritance tax and £175,000 residence nil rate band until April 2026. There is speculation the Chancellor may seek to tighten IHT rules in his forthcoming October Budget, although other areas of the tax spectrum such as CGT reform would deliver greater revenues to the Treasury.

Kingsley Napley has seen an increasing number of inquiries from those aged 65+ with growing estates who want to take legitimate steps to reduce their inheritance tax liabilities.

James Ward says there are five main ways to go about this, namely:

• Capital gifting: Sizeable transfers seven years before you die;
• Excess income gifting: Regular contributions to school fees or a mortgage can also help;
• Exemptions: Make sure to use all your nil rate bands and consider business relief. Although complex, the latter can lead to big savings.
• Life insurance: Consider this being paid out to family members. Let the insurance pay the tax.
• Skiing: Spending the Kids Inheritance! E.g. on good wine, nice food, holidays and trips out!

James Ward adds:

Those living in IHT hotspots should strongly consider all of these steps and more to avoid ranking at the top of our Inheritance Tax Premier League in future. It is always wise to have a regular review of estates and inheritance plans to ensure tax-efficiency in the event of death.”

The Kingsley Napley Inheritance Tax Premier League analysis is as follows:

1. Rank by Number of IHT Estates – 2018/19 and 2017/18 Tax Years

2. Rank by Average Value of IHT Estates – 2018/19 and 2017/18 Tax Years

NOTES TO EDITORS

The Kingsley Napley Inheritance Tax Premier League is based on HMRC data from Inheritance Tax Returns published on 29 July 2021 (Source: www.gov.uk/government/statistics) which relates to inheritance tax bills settled in 2018/19, and includes comparable figures for the 2017/18 tax year. The numbers of estates liable to tax passing on death are estimates and the numbers given are by Local Administrative Units (LAU) Level 1.

About Kingsley Napley

Kingsley Napley LLP is a leading UK based law firm providing expertise for our clients’ business and private lives, when it matters most. We advise in the following areas: employment law, private client advisory, public law, criminal defence litigation, corporate and commercial, dispute resolution, family law, medical negligence & personal injury, regulatory, real estate, construction and immigration.

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The firm ranked 73 in The Lawyer’s Top 200 UK Law Firms 2020 list by revenue.