London and South-East are most exposed
Inheritance tax (IHT) liabilities are hitting six figures across large parts of the UK, with a clear north/south divide to exposure as rising property values continue to push more estates above the tax threshold, according to new research from The Private Office.
It found that 136 local authorities are already exposed to inheritance tax in 2026, with estimated average liabilities ranging from just over £150 to more than £340,000 per estate.
London and the South-East are the most exposed, with Kensington and Chelsea topping the rankings with a potential £343,924 average bill on the average property value of £1.18 million.
Other London boroughs, including Camden, Richmond upon Thames and Hammersmith and Fulham, as well as commuter-belt areas such as Elmbridge, St Albans and Windsor and Maidenhead, are also identified as six-figure IHT hotpots.
Trafford is the only northern authority in the dataset, with an estimated average inheritance tax liability of around £20,814, significantly below the levels seen in southern hotspots.
IHT bills to rise from 2027
However, after 6 April 2027, most unused pension funds and death benefits will also be included within an individual’s estate for inheritance tax purposes.
When combined with average property values across 372 local authorities and estimated pension wealth, this could mean a further 152 areas previously below the threshold could become liable, bringing the total number of exposed local authorities to 288.
The inheritance tax nil-rate band remains fixed at £325,000 until 2030/31, while the residence nil-rate band can increase the threshold to £500,000 when passing a home to direct descendants.
However, continued house price growth means more estates are exceeding these thresholds. Across the UK, inheritance tax receipts have already reached £8.25 billion in 2024/25 and are projected to exceed £9 billion by 2026/27.
Pippa Vick, financial adviser at The Private Office (TPO), said: “Inheritance tax is increasingly becoming a property tax by default. Many families don’t consider themselves wealthy, yet long-term house price growth means their estates can face substantial tax bills. Without proper planning, beneficiaries may be forced to sell assets simply to settle the liability.”
“Pensions have long sat outside inheritance tax calculations, so bringing them into scope has a major regional impact. In high-property-value areas the effect is dramatic, but even in more affordable regions families who previously expected no inheritance tax, may now face a bill. Planning early will be crucial.”
To help individuals understand potential liabilities, The Private Office has developed an inheritance tax calculator that estimates how bills could change by 2027.
