A report from Irwin Mitchell’s Private Client Advisory team reveals that Greater London is set to face an annual Inheritance Tax (IHT) bill of £2.6bn by the end of 2027 – a 54% increase from 2022.
The findings are based on previously unreleased HMRC data obtained through a Freedom of Information request, covering 177,000 estates across all 121 UK postcode areas.
The capital is expected to see over 9,400 families liable for IHT each year by the end of 2026/27, up 43% from 2021/22. Inner London will be particularly affected, with average IHT bills projected to reach £340,000 – significantly higher than the national average and among the highest for any major global city.
Helen Clarke, Partner in Irwin Mitchell’s High Net Worth and International team, said, “London’s property values and concentration of wealth mean families here are disproportionately exposed to the impact of Inheritance Tax.
“With the average bill in Inner London set to exceed £340,000, it’s vital that individuals and families take proactive steps now. The upcoming changes to reliefs will particularly affect entrepreneurs and international families with UK assets and early planning is essential to preserve wealth across generations.”
While London is set to bear a significant share of the burden, the national picture is equally stark. Across the UK, the number of estates liable for IHT is expected to rise by 50% to over 37,000 by 2027, with the total IHT bill forecast to reach nearly £9bn.
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