Is your town among the top 10 places with the highest inheritance tax bills?

There are a few places outside of the capital where large expenses are incurred when a loved one passes away, but the wealthiest residents of London pay the highest inheritance tax

According to new data, the average inheritance tax bill for three affluent London neighborhoods is more than £1 million per estate.

With estates that pay the tax receiving an average bill of 1,375,000. Kensington is the area in the UK with the largest inheritance tax (IHT) bills.

London and Westminster (1,075,949) are the next two cities, followed by Chelsea and Fulham (1,114,583 average IHT bill).

Although the capital dominates the top 10 list, two locations outside of London do appear, according to an analysis of HMRC data conducted by the law firm Irwin Mitchell.

With an average bill of 534,247, Torridge and West Devon estates that pay IHT rank eighth on the list. In the meantime, the levy of 451,220 is imposed on the beneficiaries of estates in Altrincham and Sale West, Greater Manchester, placing them in tenth place.

The national head of Irwin Mitchell's private client advisory team, Andrea Jones, observes: "Our analysis highlights the significance of proactive estate planning, especially in areas with high-value estates. Managing inheritance tax exposure is becoming more difficult as asset portfolios and property values continue to increase.

According to the firm, the number of estates subject to IHT will increase from 4 to 7 percent by 2028, and the yearly IHT bill in Greater London is predicted to increase by 54%, from 1 to 7 billion to 2 to 6 billion.

London and the south-east pay more inheritance tax than Scotland, Wales, and Northern Ireland put together, according to a separate analysis by the insurer NFU Mutual.

Of the 6.7 billion collected by inheritance tax in the UK in 2022 - 2023, 2.98 billion was paid by estates in London and the southeast.

According to NFU Mutual, the average London estate that paid inheritance tax was assessed 300,000.

The numbers are released as the government gets ready to tax pension plans as part of a crackdown on inheritance taxes that will begin in April 2027. At the same time, IHT reforms for business and agricultural property will begin in April of the following year.

"As the primary 325,000 tax-free allowance and the 175,000 allowance that permits you to transfer a portion of the family home to children or grandchildren remain frozen until 2030, inheritance tax is having an increasing impact on a growing number of families," says Sean McCann, a chartered financial planner at NFU Mutual.

The number of affected families will only increase as a result of the proposal to include pensions in the inheritance tax net starting in April 2027.

The ten regions with the highest average IHT bills per estate.

The ten places with the highest average IHT paid per estate in 2022 - 2023 are listed below.

NFU Mutual used data on inheritance tax liabilities from HMRC as a source. Estimated estates subject to IHT for the 2022 - 2023 fiscal year.

According to NFU Mutual's analysis, nearly 12,000 families in the southeast and London paid IHT in 2022 - 2023. In contrast, there are only 334 in Northern Ireland and 555 in the northeast.

In the same tax year, London paid nearly three times as much inheritance tax as the combined totals for Scotland, Wales, and Northern Ireland.

As per HMRC, the total yearly inheritance tax revenues have grown from 3.3 billion in 2005-2006 to 8.2 billion in 2024-2025.

People seeking advice on IHT have increased.

According to wealth managers and financial advisors, more people are requesting IHT advice.

According to McCann at NFU Mutual, we are seeing a significant spike in calls from people looking for inheritance tax advice, especially in light of the proposed changes to business and agricultural property relief that are set to take effect in April of next year. These changes will have a significant impact on the farming and business communities.

Rathbones, RBC Brewin Dolphin, and St. Jamess Place also informed the BFIA that they have observed a rise in pension savers who are anxious about the impending changes to the IHT.

An increasing number of retirees are taking more money out of their pension funds in an effort to lower the size of their estate and, consequently, any possible IHT liability.

Yet, wealth managers caution that there may be serious unforeseen repercussions, like running out of money in retirement and having to pay income tax on the benefits.

The government's changes to the inheritance tax have practical ramifications, which worries Irwin Mitchell as well.

A "legal and emotional minefield, especially when pension beneficiaries differ from estate beneficiaries," the firm cautions, could result from the changes. In order to pay tax bills, executors may be compelled to use estate assets, possibly including the family home, and then pursue reimbursement from pension recipients who are not legally required to assist.

We examine nine strategies to lower an inheritance tax bill in separate guides, and we dispel six inheritance tax myths.