The UK regions where the percentage of homes above the inheritance tax threshold is highest

Across the nation, rising housing costs are forcing more families into the inheritance tax trap

Families are being forced to pay inheritance tax as the number of homes rises.

An issue affecting every region of the UK is the increasing number of estates falling into the inheritance tax trap due to a combination of rising home prices and tax thresholds.

A home bought in 2025 is now three times more likely to expose a family to inheritance tax than it was in 2009, according to research by law firms Shakespeare Martineau, Mayo Wynne Baxter, and Lime Solicitors.

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Start your trial According to an analysis of Land Registry data, only 83,266 out of 625,205 property purchases in England and Wales in 2009 were at or above the 325,000 inheritance tax threshold. That percentage increased to 41 percent, or 281,734 out of 681,054, by 2025.

The 325,000 nil-rate band has been frozen since 2009 and is expected to remain so until at least 2031.

For many homeowners, even the main residence nil-rate band threshold of 175,000, which theoretically raises the inheritance tax allowance to 500,000, is not very helpful.

Additionally, from 5% in 2009 to 18% in 2025, the percentage of homes bought for £500,000 or more more than tripled during that time.

The areas where the inheritance tax net is most prevalent.

London has the largest percentage of properties that might be subject to inheritance tax, which may come as no surprise. In 2025, 52% sold for more than 500,000, while the majority (84%) sold for more than 325,000. The percentage has increased from 15% and 35%, respectively, in 2009.

However, high-value homes may increase inheritance tax bills outside of London and the South East.

Between 2009 and 2025, the percentage of homes over 325,000 sold in Wales increased from 4% to 20%, while in the East of England, the percentage of homes sold over 500,000 increased from 4% to 22%.

"When modern inheritance tax was first introduced as estate duty in the late 1800s, it was designed to apply only to the very wealthy," stated Fiona Dodd, private client partner at Mayo Wynne Baxter.

But since the tax-free allowance has been frozen for nearly 20 years, rising real estate costs have gradually attracted more families to the program.

"Many believe they will never be impacted by inheritance tax. However, a growing percentage of homes now approach or surpass the 325,000 threshold before savings, investments, or personal belongings are even taken into account, as our analysis reveals.

"Families may be left with a sizable and unanticipated bill during an already trying time if inheritance tax is levied at 40% above the threshold. The "

This is even before homeowners take into account the value of their pension, which will be taken into account starting in April 2027 when calculating inheritance taxes.

How to lower your inheritance tax liability.

Giving gifts while you're still living and leaving assets to your spouse, which are tax-free, are two ways you can lower your inheritance tax liability.

The head of inheritance disputes at Lime Solicitors, Andrew Wilkinson, stated: "There is just more at stake both financially and emotionally with estates increasing in value, pensions becoming subject to inheritance tax, and the threshold remaining static.

"Tax-efficient choices, like leaving larger portions to charity, a spouse, or a civil partner, may inadvertently cause conflict in blended families or among dependents who anticipated a different result.

"As families struggle with the conflicting demands of tax efficiency and fairness, we are likely to witness more conflicts.

"Open, honest communication within families and careful, professional advice are the best defenses against future conflicts. Lack of clarity and unexpected provisions in a will are the root cause of many of our cases. The "