Increasing numbers of homes are pushing families into paying inheritance tax.
A combination of rising house prices and tax thresholds pushing more estates into the inheritance tax trap – an issue affecting all parts of the UK.
Research by law firms Shakespeare Martineau, Mayo Wynne Baxter and Lime Solicitors found that a home purchased in 2025 is now three times more likely to expose a family to inheritance tax than in 2009.
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Analysis of Land Registry data reveals that in 2009, just 13% of all property purchases in England and Wales or 83,266 of 625,205 were at or above the £325,000 inheritance tax threshold. By 2025, that proportion had surged to 41% or 281,734 of 681,054.
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It comes as the £325,000 nil-rate band has remained frozen since 2009 and is set to stay at that level until at least 2031.
Even the main residence nil-rate band threshold £175,000, which technically pushes the inheritance tax allowance to £500,000, is of little help to many homeowners.
The number of homes purchased for £500,000 or more has also more than trebled over the same period from 5% in 2009 to 18% in 2025.
The regions with the highest proportion of homes in the inheritance tax net
Perhaps unsurprisingly, London has the highest proportion of homes that could be liable for inheritance tax. The majority (84%) sold for more than £325,000 in 2025, while 52% sold for more than £500,000. The proportion is up from 35% and 15% in 2009 respectively.
But it is not just London and the South East where high value homes could push up inheritance tax bills.
Wales has seen the proportion of homes sales above £325,000 soar from 4% to 20% between 2009 and 2025, while the East of England has seen £500,000 home sales rise from 4% to 22%.
Fiona Dodd, private client partner at Mayo Wynne Baxter, said: “When modern inheritance tax – originally introduced as estate duty in the late-1800s – was created, it was designed to apply only to the very wealthy.
“However, with the tax-free allowance frozen for almost two decades, rising property prices have steadily drawn more families into the scope.
“Many people assume inheritance tax will never affect them. But as our analysis shows, a growing proportion of homes now approach or exceed the £325,000 threshold – before savings, investments or personal possessions are even considered.
“With inheritance tax charged at 40% above the threshold, families can be left facing a substantial and unexpected bill at an already difficult time.”
This is even before homeowners consider the value of their pension, which will be included in inheritance tax calculations from April 2027.
How to reduce your inheritance tax bill
There are steps you can take to reduce your inheritance tax bill such as gifting while still alive and leaving assets to your spouse, which would be tax-free.
Andrew Wilkinson, head of inheritance disputes at Lime Solicitors, said: “With estates growing in value, pensions becoming subject to inheritance tax and the threshold remaining static, there is simply more at stake – financially and emotionally.
“Tax-efficient decisions, such as leaving larger proportions to charity or to a spouse or civil partner, can unintentionally create tension in blended families or among dependants who expected a different outcome.
“We are likely to see more disputes as families grapple with the competing pressures of tax efficiency and fairness.
“The best protection against future disputes is careful, professional advice and open, honest communication within families. Many of the cases we see stem from a lack of clarity and unexpected provisions in a will.”
