Residential property in London makes up around half the value (49%) of all estates facing inheritance tax (IHT), a Freedom of Information (FOI) request by Just Group has found.

This compares to a quarter or less in areas including Wales (25%), the North East (24%), Scotland (23%) and Northern Ireland (18%).

Analysis of the HMRC figures provided to Just Group also showed that the proportion of estates made up of cash and financial securities is lower in London and the East of England than other regions.

The retirement specialist suggested the figures put a “spotlight on estate planning options” where home value is likely to make up a large proportion of an estate on death.

“Although the average value of estates liable for IHT doesn’t vary much by region, the components of those estates is very different,” commented group communications director at Just Group, Stephen Lowe.

“In areas such as London and the East of England, property is a much bigger proportion of the estate and relatively low amounts of cash and securities are left compared to other areas which may require a very different approach to estate planning.”

Comparing the latest HMRC figures, which were available for the 2018/19 tax year, to the number of deaths recorded in each region that year, Just Group estimated that IHT is due on about one in every 30 deaths (3.5%) in the UK.

Estates left by those living in higher house price areas are most likely to pay IHT – with the most in London at 7.6% of deaths, followed by the South East (5.7%), South West (4.3%) and East of England (4.1%).

“Property can be tricky when it comes to estate planning because it is providing a place to live and is often a sentimental as much as a financial asset and,” Lowe added. “It is also illiquid in the sense you can’t sell or gift part of a property as easily as cash or other investments.

“That is why we are seeing equity release being used for estate planning because cash released can be gifted and, depending on how long the homeowner lives, may not form part of the estate on death or will attract a lower rate of IHT.”

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