There has been huge coverage of IHT and the fact that unused pensions will be subject to inheritance tax from April next year - unless our new Chancellor steps in and waters down or axes this deeply unpopular new burden, as he should.
What’s less well known is that most of the burden of IHT falls on a relatively small number of taxpayers.
A new report has found that families in London and the South East of England paid 46% of all UK inheritance tax bills in the last year - up from 44% the previous year, according to analysis of HMRC data by TWM Solicitors, a private wealth and family law firm based in Surrey.
Analysis found that 18 of the 20 top-paying areas for IHT bills were in London or the South East.
Overall in the UK, the number of estates worth more than £1m reached 9,130, growing steadily over the past five years, and these estates paid £1.2bn in IHT during the last tax year. Only Edinburgh and Brentwood/Ongar in the East of England were outside London and the South East.
The number of estates subject to IHT is relatively small but set to grow rapidly and particularly affects London and the South East.
Many will say it’s only fair that people in the wealthiest areas should pay a bit more but that ignores some major regional differences, in house prices for example, which often form a large part of estates.
Salaries too are often higher in London than elsewhere and so on. Wealth is simply more concentrated in the South East.
It will be hard, of course, to seek sympathy for well off families who leave their substantial estates to their children but it’s clear that fairness is missing here and this needs to be reviewed.
With the imposition of IHT on unused pensions from next year many more families will be hit with hefty tax bills and that number will grow rapidly as thresholds are kept down and more estates are clawed into the IHT tax regime.
With PM Andy Burnham considering, we are told, a 10% tax on all inheritances (it’s not clear if this is in addition or instead of IHT on pensions), the time is ripe for a full scale pause and review of how we tax wealth and what tax burden we can or should impose on our wealth creators, as many of them are.
Imposing higher burdens on people simply because of where they live is not the answer to our gaping tax gap problems.
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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and daily news. This topical comment appears most weeks, usually on Fridays but occasionally other days. Email: