More than 1,400 estates in Yorkshire and Humber faced inheritance tax bill

• Inheritance tax raised £237m in Yorkshire and Humber
• Average IHT bill in the region was £162,000

More than 1,400 estates in Yorkshire and Humber paid £237m in inheritance tax for the tax year ended April 2023 according to an analysis of HM Revenue & Customs (HMRC) figures by NFU Mutual, the financial advisory firm.

New regional figures released by HMRC show that 1,460 estates in Yorkshire and the Humber paid IHT -with the average estate paying an estimated £162,000. Topping the list of areas paying the most in the region was the parliamentary constituency of Harrogate and Knaresborough where £22m was paid by 97 estates.

The figures also show that estates in London and the southeast paid £2.98bn of the £6.7bn raised in the UK by inheritance tax for the tax year ended April 2023, according to an analysis of HMRC figures by NFU Mutual. London paid almost three times more inheritance tax than Scotland, Wales and Northern Ireland combined in 2022-23, according to the figures.

London and the south east accounted for 44 per cent of all UK inheritance tax in the tax year 2022-2023 and the average taxpayer in London was charged £300,000 from the levy, according to HMRC.

In London some 5,100 estates paid £1.53bn in IHT during 2022-23 and the levy raised £100m apiece in three of the capital’s wealthiest parliamentary constituencies, according to HMRC’s figures.

Top of the list was Kensington where 112 estates paid £154m followed by Chelsea and Fulham where 96 estates paid £107m in inheritance tax and 183 estates in Finchley and Golders Green paid £103m in 2022-23.

Besides the £40m raised in Northern Ireland, 1,030 estates in Wales paid £155m in the same tax year and 1,680 estates in Scotland were liable for £331m of IHT.

The south-east region recorded the highest number of estates subject to inheritance tax – with 6,650 estates paying £1.45bn in tax.

In the north west region 2,040 estates were liable for inheritance tax raising £347m and in the south west 3,640 estates were subject to IHT raising £706m in the tax year ended April 2023.

The latest figures highlight that growing numbers of estates outside London and the south east are being drawn into paying the levy due to rising property values and a long running freeze on the tax-free threshold.

HMRC said a total of 31,500 estates paid the levy in 2022-23 – a 13 per cent increase from the previous tax year and added that 4.62 per cent of deaths resulted an inheritance tax charge in that tax year.

Annual IHT receipts over the last 20 years have increased from £3.3 bn in 2005-2006, to £8.2bn in 2024-2025, according to HMRC. The Office for Budget Responsibility said in March that it estimated that by 2029-30 tax receipts from IHT would rise to £14.3bn and that 9.5 per cent of UK deaths would result in an inheritance tax charge. The government published draft legislation in July confirming it will curb agricultural and business property relief in April 2026 and bring unspent pensions within the inheritance tax net after April 2027.

Sean McCann, chartered financial planner at NFU Mutual, the financial advisory firm, said: 

Inheritance tax is impacting a growing number of families, as property and asset values continue to rise, 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.

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.

One way to reduce the problem is to make gifts during your lifetime. While for most gifts you need to survive seven years to ensure they are tax free, there are some gifts which are exempt immediately.

Each tax year you can give away gifts totalling £3,000 immediately free of inheritance tax. If you haven’t used the previous year’s allowance, you can go back one year and get it. For example, a couple could potentially give away £12,000 without having to worry about the seven-year clock.

Regular gifts from your income which don’t impact your normal standard of living are also immediately exempt from inheritance tax.

The average inheritance tax bill now stands at £213,000. Although this is skewed by the wealthiest taxpayers, increases in property prices, and frozen tax-free allowances mean that a growing number of families are facing a liability.

Inheritance tax liability by region – estimated numbers of estates liable to IHT in 2022-23 tax year

Source: HMRC Inheritance Tax liabilities statistics – GOV.UK