Edinburgh sees biggest rise in UK inheritance tax bills – up 315% in one year
Edinburgh saw the largest increase in UK Inheritance Tax (IHT) bills in 134 regions over the past year, with the total IHT bill in the Scottish capital rising 315% to £ 54million in the most recent fiscal year *, compared to £ 13million. Over the past 12 months, shows a study by leading private wealth management law firm Boodle Hatfield.
Boodle Hatfield says rising house prices mean the IHT is no longer limited to wealthier families or wealthier neighborhoods in London and the South East. Often times, owning a family home within an estate can be enough to force dependents to pay an IHT bill.
The Scottish capital of Edinburgh has experienced high house price inflation in recent years, with house prices rising 5% in 2019 alone. Benefiting from the trendy and historic areas of New Town , the Royal Mile and Broughton, it is also home to Scotland’s most expensive street, Regent’s Terrace, where houses sell for an average of £ 1.75million.
Apart from the issue of house price inflation, the exempt inheritance tax allowance has also not increased in line with inflation, remaining at £ 325,000 since April 2009. If the exempt deduction Inheritance tax had increased in line with inflation, the threshold would be £ 445,825.
Boodle Hatfield says the failure to increase the inheritance tax exemption threshold, coupled with rising house prices that increase the value of the deceased’s estate, is the reason some families are seeing their bills. inheritance taxes increase so sharply.
Although the London Borough of Westminster – home to affluent neighborhoods like Mayfair, Belgravia and Marylebone – recorded the second percentage increase in inheritance tax ** up 150% from £ 68million to £ 130million pounds, this is the only London location in the Top 5 for IHT increases.
The third was the region of Dunbartonshire, north-west of Glasgow, with an increase of 88%. From 2017/18 to 2018/19, this estate saw its inheritance tax bill drop from £ 8million to £ 15million.
Dunbartonshire is home to a number of lush and wealthy areas within a switchable distance of Glasgow city center. One of them, Bearsden, had an average house price of £ 360,000 at the start of 2019.
Kyra Motley, Partner at Boodle Hatfield, says: “Research showing that parts of Scotland and Wales have growing inheritance tax bills is not surprising when you consider the rising prices of housing throughout the UK.
“As London and the South East continue to dominate in terms of overall paid IHT, it is clear that the gap between these regions and the rest of the UK is narrowing.”
Geoffrey Todd, Partner at Boodle Hatfield adds: “The growth in IHT liabilities can also be attributed to the lack of adjustment of the inheritance tax threshold, which has been at the same level for 17 years.
“The government has announced that the inheritance tax relief will remain at the current level until 2026, so we should expect to see this trend continue over the next five years.”
The biggest increases in inheritance tax by zone
* 2018/19 ** Regions where less than £ 5million in IHT was paid in 2017/18
This article first appeared in The temperature August 29, 2021.