Among the hardest-hit locations are Wimbledon, where the average IHT bill stands at £566,000, and Guildford, with an average bill of £302,000.
Following the Government’s decision to restrict key IHT exemptions, the overall tax burden on estates is expected to rise further. The greatest impact is likely to be felt by families in areas where IHT bills are already high.
While more estates are being drawn into IHT, there are still steps families can take to plan ahead and protect their wealth.
Why London and the South East pay more Inheritance Tax
The biggest driver of higher IHT bills in London and the South East is property values. Average house prices in these areas exceed the point at which IHT becomes payable – unlike anywhere else in the UK – meaning that even relatively ordinary homes can trigger a tax charge.
This is compounded by the fact that the IHT threshold (the nil-rate band) has been frozen at £325,000 since 2009, with no adjustment for inflation. While property values have risen sharply over that period, the threshold has remained unchanged. As a result, estates that would once have fallen below the threshold are now being pulled into the tax net.
The threshold was originally set so that only wealthier families with significant assets would end up paying Inheritance Tax. But after years of being frozen, even families with modest assets tied up in their home are impacted.
Local hotspots for high inheritance tax bills
Alongside Wimbledon and Guildford, the list of towns that face particularly high IHT bills includes Kensington, which recorded the highest average IHT bills in the UK, at around £1.4m. Richmond Park saw the largest number of estates liable for IHT, with 184 estates affected.
Business and agricultural reliefs under pressure
IHT reliefs have long helped protect family businesses and farms from being sold to meet tax liabilities. However, from April 2026, a new £2.5m cap will apply to the value of business and agricultural property that can qualify for Inheritance Tax relief.
Unused allowances may be transferred to a surviving spouse, allowing a combined cap of £5m. However, any value above this will be taxed at 40%.
Our research shows that the cuts to Business Property Relief (BPR) and Agricultural Property Relief (APR), confirmed in the 2025 Budget, could force many families to sell their businesses or land simply to pay an Inheritance Tax bill. This risks jobs, local economies, and the preservation of long-standing family enterprises.
It is also important to note that unmarried couples who live together cannot transfer unused allowances between partners. This means their relief cap remains fixed at £2.5m, leaving them more exposed to IHT.
Widowed women are disproportionately affected
Widows account for around a third of all IHT bills, compared with just over one fifth for widowed men. This means recent crackdowns on IHT reliefs are likely to impact widowed women the most.
How TWM can help
Inheritance Tax is no longer a concern for a small minority. Rising property values, frozen thresholds, and tighter tax reliefs mean more families are now facing IHT, sometimes without sufficient cash in the estate to pay the bill.
At TWM Solicitors, we help individuals and families understand their exposure to IHT and plan ahead with confidence. We provide clear, practical advice on protecting family wealth, reducing the tax burden where possible, and ensuring the right plans are in place well before they are needed. Contact our Private Client team today.
