More estates in Guildford paid inheritance tax than any other postcode area in the UK, according to new research from Direct Line Life Insurance.
Analysis of inheritance tax payments by postcode area puts Guildford (658) ahead of South West London (655) in second place, followed by Brighton (585) in third.
However, when it comes to the largest tax bills generated from estates of the deceased London postcodes far outstrip the rest of the UK, with estates in the SW postcode (including such areas such as Whitehall, Chelsea, Barnes and Wimbledon) paying 48% more inheritance tax than the second highest ranking area.
Estates in South West London paid £227 million in tax compared to £153 million paid by those in the NW London postcode, which includes the areas of Marylebone, Hampstead and Golders Green.
Estates in Guildford paid £152 million in inheritance tax and those in Kingston upon Thames £123 million in a single year. To put these charges in context, in the same period, estates in Wigan paid just £6 million in total, Inverness £5 million and Motherwell and Falkirk in Scotland paid £4 million each.
Estates in West London paid the highest average inheritance tax bill per estate at £390,678, followed by those in North West London at £381,546 and South West London at £346,565. The lowest average recorded payments were made by estates in Dartford £97,175 and Dudley £102,706.
Jane Morgan, business manager at Direct Line Life Insurance, said: “Brits pay billions of pounds in inheritance tax each year with large variations across the country, often due to differences in property values. If you are concerned about the amount of tax that may be payable on your estate when the time comes, you could seek independent advice and investigate transferring money to beneficiaries early as a gift or placing assets into trust to reduce your liabilities.
“With almost one in 10 (9%) parents placing their assets into trust, this is something people should also consider when arranging their life insurance. Placing a life insurance policy into a trust could avoid payments being included in inheritance tax calculations. However, just 20% of people with a life insurance policy have placed this into trust and almost a fifth of those with a life insurance policy admit they did not know this was an option.”
Estates in the Greater London region paid the highest amount of inheritance tax on a regional basis at over £1.1 billion. This is followed by the South East where estates paid £805.5 million and the South West at £404.6 million. Estates in Wales (£100.8 million) and Northern Ireland (£27.2 million) paid the least tax.
George Hodgson, CEO of STEP, said: “Rising property values mean that growing numbers of families need to think about inheritance tax and how this might affect them. Good advice from estate planning expert is essential, since there are some simple steps you can take to both minimise your tax bill and make it easier for your family to fund any tax due.”
Morgan added: “When considering whether to put a life insurance policy into a trust, it is important to seek independent financial advice. If a policy is written into a trust, it could help to ensure that any money paid out from the life policy would not be part of the estate of the person covered, helping to minimise Inheritance Tax. This will also help to ensure that the money paid out from the life policy can be paid to the right people quickly, without the need for lengthy legal processes.
“Another benefit of placing a policy under trust is that you can indicate who you want the proceeds to be paid to. A trust can control when the money from the life policy will be paid out. This can ensure that children receive some financial support from the money, but do not have full access to it.
“Direct Line Life Insurance offers an affordable way for people to help look after their loved ones financially if they pass away during the term of the policy, paying out a lump sum, to help deal with every day money concerns such as household bills, childcare costs and mortgage payments.”
