More families are bracing for inheritance tax bills – often running into tens of thousands of pounds – with people in some parts of the country to be worse hit than others.
A new report has highlighted the UK’s inheritance tax hotspots, where the number of estates liable for the tax, as well as how much is due, are set to increase.
Inner London stands out with some of the highest figures for inheritance tax, due to its substantial wealth concentration and high property values. But other cities like Wolverhampton, Manchester, Bradford, Leeds, Sheffield and Edinburgh also show considerable rises in affected estates and IHT bills.
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Overall, the number of estates in the UK subject to IHT will exceed 37,000 by 2027 and result in a total bill of almost £9 billion, according to the report by law firm Irwin Mitchell, based on findings from an HMRC Freedom of Information request.
The predictions are based on previously unseen government statistics which cover 177,000 IHT estates across all 121 UK postcodes.
The forecasts have been adjusted to account for changes announced in chancellor Rachel Reeves’ Budget last year which saw the threshold freeze extended until 2030 and changes to business property relief (BPR) and agricultural property relief (APR) from April 2026.
Andrea Jones, national head of Irwin Mitchell private client advisory team, said: “The increase in inheritance tax liabilities across the UK is a significant concern for many families.
“Our findings highlight the urgent need for individuals to seek professional advice to navigate these changes and plan effectively for the future.”
Given the aforementioned threshold freeze extension and the BPR and APR changes, Jones said: “It’s more important than ever to understand the implications and take proactive steps to mitigate the impact on estates.”
In a separate article we look at ways to reduce your IHT bill.
Which cities have the biggest predicted increase in IHT bill?
Bradford is predicted to have the biggest jump in the number of estates subject to IHT by 2027, increasing by 150% to 173. The total amount owed by Bradford families is expected to rise by 233% to £30 million.
Wolverhampton is forecast to have the biggest increase in IHT bills by 2027, which is expected to rise by 375% to £38 million. This is predicted to be collected from 143 estates, more than double the number affected in 2015.
Inner London has the highest overall number of estates expected to be facing IHT bills in two years’ time, at 4,813, an increase of 80% since 2015. Inner London families are predicted to pay £1.6 billion in IHT by 2027, almost double the figure paid 10 years ago.
Leeds, Manchester, and Birmingham are all seeing double-digit increases in the percentage of estates liable for inheritance tax.
|
Location |
Number of IHT estates 2015/16 |
Predicted number of IHT estates 2026/27 |
Percentage increase (estates) |
IHT liability 2025/16 |
Predicted IHT liability 2026/27 |
Percentage increase (IHT liability) |
|---|---|---|---|---|---|---|
|
Wolverhampton |
69 |
143 |
107% |
£8m |
£38m |
375% |
|
Liverpool |
117 |
177 |
51% |
£15m |
£43m |
253% |
|
Manchester |
142 |
195 |
37% |
£16m |
£55m |
250% |
|
Bradford |
69 |
173 |
150% |
£9m |
£30m |
233% |
|
Belfast |
213 |
379 |
78% |
£27m |
£83m |
207% |
|
Sheffield |
176 |
257 |
46% |
£24m |
£52m |
200% |
|
Southampton |
336 |
656 |
95% |
£59m |
£176m |
198% |
|
Edinburgh |
296 |
526 |
77% |
£45m |
£126m |
180% |
|
Bristol |
392 |
596 |
52% |
£55m |
£134m |
145% |
|
Cardiff |
207 |
262 |
26% |
£25m |
£61m |
144% |
Cities with the biggest predicted average IHT bill by 2027
The average IHT bill in Greater London is expected to be £275,000 by 2026/27 and even higher in Inner London at £340,000, due to the significant wealth concentration in those areas.
Out of the large cities excluding London, Manchester is predicted to have the second highest average IHT bill at £282,051 per estate – approximately £40,000 more than the predicted national average of £239,000.
Sheffield, while showing substantial increases, has a slightly lower average tax bill per estate compared to other major cities, reflecting its more modest property values.
|
Location |
Predicted number of IHT estates 2026/27 |
Predicted IHT liability 2026/27 |
Average IHT bill per estate |
|---|---|---|---|
|
Inner London |
4,813 |
£1,637m |
£340,120 |
|
Manchester |
195 |
£55m |
£282,051 |
|
Birmingham |
458 |
£126m |
£275,109 |
|
Glasgow |
272 |
£69m |
£253,676 |
|
Liverpool |
177 |
£43m |
£242,937 |
|
Edinburgh |
526 |
£126m |
£239,543 |
|
Bristol |
596 |
£134m |
£224,832 |
|
Leeds |
318 |
£67m |
£210,377 |
|
Sheffield |
257 |
£52m |
£202,334 |
The report concluded: “The projected increase in IHT liabilities and revenue highlights the importance of proactive estate planning.
“By considering strategies such as gifting, trusts, and reviewing pension and investment plans, individuals can better manage their estates and mitigate the impact of these changes.”
We bust six inheritance tax myths in a separate piece.
