• More estates in Guildford pay inheritance tax than any other area in the UK
  • Largest inheritance tax yield recorded in South West London where estates paid £227 million in a year
  • Largest average inheritance tax bill per estate in West London, at over £390,000
  • Lowest average inheritance tax bill per estate is in Dartford at just £97,175

New research1 from Direct Line Life Insurance reveals more estates in Guildford paid inheritance tax than any other postcode area in the UK. 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 per cent 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 North West 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 £6million in total, Inverness £5 million and Motherwell and Falkirk in Scotland paid £4 million each.

Table One: Breakdown of inheritance tax liability by postcode

Postcode area Number of estates paying inheritance tax Tax liability (m) Average tax liability per estate
Guildford 658 £152 £231,003
South West London 655 £227 £346,565
Brighton 585 £92 £157,436
Kingston upon Thames 582 £123 £211,340
North London 502 £119 £237,052
Tunbridge Wells 493 £100 £202,840
Redhill 434 £80 £183,180
Reading 413 £75 £181,356
North West London 401 £153 £381,546
Bristol 396 £56 £140,404

Source: Direct Line Life Insurance

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, commented: "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 gift2 or placing assets into trust to reduce your liabilities.

With almost one in ten (nine per cent)3 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 trust4 could avoid payments being included in inheritance tax calculations. However, just 20 per cent 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."

Regional analysis: 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.

Table two: Breakdown of inheritence tax liability by region

Region Number of estates paying inheritance tax Tax liability (m)
Greater London 5294 £1136.30
South East 4442 £805.50
South West 2783 £477.40
East of England 2472 £404.60
North West 1458 £211.40
Scotland 1194 £215.12
West Midlands 1036 £151.53
East Midlands 952 £154.44
North East 853 £146.51
Wales 763 £100.80
Northern Ireland 215 £27.20

Source: Direct Line Life Insurance

George Hodgson, CEO, STEP commented: "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 continued: "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."

For more information on life insurance, please visit https://www.directline.com/life-cover/inheritance-tax

Notes to Editors

1 Analysis of data supplied by HM Revenue & Customs 20th September 2018 in response to a Freedom of Information Act (2000) request made by Direct Line Life Insurance. Data provided captures the period 2015-2016 (latest data set provided with postcode data) covering the number of estates and tax liability by postcode area

2 https://www.gov.uk/inheritance-tax/gifts - There’s usually no Inheritance Tax to pay on small gifts you make out of your normal income, such as Christmas or birthday presents. These are known as ‘exempted gifts’. There’s also no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently. Other gifts count towards the value of your estate - People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.

3 Research conducted by Opinium among a nationally representative sample of 2,003 adults between 27th to 20th July 2018

4 If written so it is legally compliant: Source: Withers Worldwide

For further information please contact:

Claire Jarrett
PR Manager
Direct Line Group
Tel: 01651 832 411
Email: claire.jarrett@directlinegroup.co.uk

Katie Ormrod
Citigate Dewe Rogerson
Tel: 0207 282 1023
Email: katie.ormrod@citigatedewerogerson.com

Direct Line

Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides motor, home, travel, pet and life insurance cover direct to customers by phone or on-line.

Direct Line life insurance policies are underwritten by Legal & General, registered office: One Coleman Street, London EC2R 5AA. Legal & General Assurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 117659. You can check the FCA register at www.fca.org.uk/register or call the FCA on 0800 111 6768 . Legal & General will introduce customers who select the Funeral Benefit Option to Dignity Funeral Services, who are members of the National Association of Funeral Directors.

Customers can find out more about Direct Line products or get a quote by calling 0800 145 5522 or visiting www.directline.com/life-cover