Top 10 areas with the biggest inheritance tax bills – is your town on the list?

People in some of the wealthiest parts of London pay the most inheritance tax – but there are a few areas outside the capital where big bills are paid when a loved one dies

IHT inheritance tax
(Image credit: Getty Images)

A trio of wealthy London neighbourhoods face an average inheritance tax bill of more than £1 million per estate, new figures reveal.

Kensington tops the list of UK areas with the biggest inheritance tax (IHT) bills, with estates that pay the tax hit with an average bill of £1,375,000.

Chelsea and Fulham comes second (£1,114,583 average IHT bill), followed by the cities of London and Westminster (£1,075,949).

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Estates that pay IHT in Torridge and West Devon face an average bill of £534,247, placing it eighth in the list. Meanwhile, beneficiaries of estates in Altrincham and Sale West in Greater Manchester are hit with a £451,220 levy, putting it in the tenth spot.

Andrea Jones, national head of Irwin Mitchell’s private client advisory team, comments: “Our analysis underscores the importance of proactive estate planning, particularly in areas with high-value estates. As property values and asset portfolios continue to rise, so too does the complexity of managing inheritance tax exposure.”

The firm forecasts that the number of estates liable for IHT will rise from 4% to 7% by 2028, with Greater London’s annual IHT bill expected to grow by 54% from £1.7 billion to £2.6 billion.

Estates in London and the south-east paid £2.98 billion of the £6.7 billion raised by inheritance tax in the UK in 2022-2023.

The average inheritance tax-paying estate in London was charged £300,000, according to NFU Mutual.

Sean McCann, chartered financial planner at NFU Mutual, comments: “Inheritance tax is impacting a growing number of families, as the main £325,000 tax-free allowance and £175,000 allowance that allows you to pass a share of the family home to children or grandchildren remain frozen until 2030.

‘’The proposal to bring pensions into the inheritance tax net from April 2027 will only accelerate the number of families impacted.’’

Top 10 areas with highest average IHT bill per estate

Here are the top 10 locations for average IHT paid per estate in 2022-23:

Swipe to scroll horizontally

Area

Average IHT bill per estate


Kensington

£1,375,000


Chelsea and Fulham

£1,114,583

Cities of London and Westminster

£1,075,949

Hampstead and Kilburn

£717,949


Westminster North

£647,059


Finchley and Golders Green

£562,842

Wimbledon

£556,452

Torridge and West Devon

£534,247

Islington South and Finsbury

£468,085

Altrincham and Sale West

£451,220

Source: HMRC inheritance tax returns July 2025, analysed by Irwin Mitchell. Note that the figures are an average of estates in that area that paid IHT; they exclude estates that did not have an IHT liability

Region by region: inheritance tax liabilities compared

Swipe to scroll horizontally

Region

Number of estates with an IHT bill

Total amount paid in region (£m)

Average bill per IHT-paying estate

South-east

6,650

1,450

£218,000

London

5,100

1,530

£300,000

South-west

3,640

706

£194,000

East of England

3,430

672

£196,000

North-west

2,040

347

£170,000

West Midlands

1,840

356

£193,000

Scotland

1,680

331

£197,000

East Midlands

1,470

249

£169,000

Yorkshire and Humber

1,460

237

£162,000

Wales

1,030

155

£150,000

North-east

555

87

£157,000

Northern Ireland

334

40

£120,000

Source: NFU Mutual, using HMRC inheritance tax liabilities statistics. Estimated numbers of estates liable to IHT in the 2022-23 tax year.

The analysis by NFU Mutual shows that almost 12,000 families in London and the south-east paid IHT in 2022-23. This compares to just 334 in Northern Ireland and 555 in the north-east.

London paid almost three times more inheritance tax than Scotland, Wales and Northern Ireland combined in the same tax year.

Overall, annual inheritance tax receipts have increased from £3.3 billion in 2005-2006 to £8.2 billion in 2024-2025, according to HMRC.

Increase in people seeking IHT advice

Wealth managers and financial advisers are reporting a rise in the number of people seeking IHT advice.

McCann at NFU Mutual observes: ‘’We are seeing a sharp increase in calls from those seeking inheritance tax advice, particularly in light of proposed changes to agricultural property relief and business property relief from April next year, which will have a huge impact on farming and business communities.”

Rathbones, RBC Brewin Dolphin and St. James’s Place have also told MoneyWeek that they’ve seen an increase in pension savers worried about the upcoming IHT changes.

Some retirees are now withdrawing more money from their pension pots in an attempt to reduce the size of their estate and therefore any potential IHT bill.

Wealth managers warn that there could be significant unintended consequences though, such as running out of money during retirement and being hit with income tax on the withdrawals.

Irwin Mitchell is also concerned about the practical implications of the government’s inheritance tax reforms.

The firm warns that the changes could turn estate administration into a “legal and emotional minefield, especially when pension beneficiaries differ from estate beneficiaries. Executors may be forced to use estate assets – potentially including the family home – to pay tax bills, then seek reimbursement from pension recipients who are under no legal obligation to cooperate”.

We debunk six inheritance tax myths and look at nine ways to reduce an inheritance tax bill in separate guides.

Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.


She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.