Rising property values are pushing more estates into inheritance tax territory with new research showing liabilities now reaching six figures across large parts of southern England while northern exposure remains extremely limited.
Analysis from wealth management firm The Private Office found that 136 local authorities are already exposed to inheritance tax liabilities in 2026, with average bills ranging from just over £150 to almost £344,000 per estate.
Kensington and Chelsea tops the national rankings, where the average inheritance tax bill is estimated at £343,924, driven by average property values of £1.18m. Other London boroughs including Camden, Richmond upon Thames and Hammersmith & Fulham also recorded projected liabilities well into six figures.
Outside the capital, affluent commuter belt locations such as Elmbridge, St Albans and Windsor & Maidenhead also featured prominently.
NORTH-SOUTH DIVIDE
The research highlights a stark north-south divide in inheritance tax exposure, with Trafford emerging as the only northern local authority included in the dataset. The Greater Manchester borough recorded an estimated average inheritance tax liability of £20,814 – far below levels seen across London and the South East.
The Private Office says continued house price growth, combined with frozen inheritance tax thresholds, is dragging more families into scope despite many not considering themselves wealthy.
The inheritance tax nil-rate band remains frozen at £325,000 until 2030/31, while the residence nil-rate band can increase the threshold to £500,000 when passing a home to direct descendants.
The report also warns that planned pension rule changes due from April 2027 could widen exposure significantly further. Under the reforms, most unused pension funds and death benefits will form part of an estate for inheritance tax purposes for the first time.
The Private Office estimates this could increase the number of exposed local authorities from 136 to 288 once pension wealth is included within inheritance tax calculations.
PROPERTY TAX
Pippa Vick (main picture, inset), Financial Adviser at The Private Office, says: “Inheritance tax is increasingly becoming a property tax by default.
“Many families don’t consider themselves wealthy, yet long-term house price growth means their estates can face substantial tax bills. Without proper planning, beneficiaries may be forced to sell assets simply to settle the liability.
“Pensions have long sat outside inheritance tax calculations, so bringing them into scope has a major regional impact.
“In high-property-value areas the effect is dramatic, but even in more affordable regions, families who previously expected no inheritance tax may now face a bill. Planning early will be crucial.”
