The rising average price of property continues to push more estates into the inheritance tax (IHT) threshold, with London and the South East unsurprisingly hit hardest. New research suggests as many as 288 local authorities in England and Wales are more exposed as a result of average property prices, combined with estimated pension wealth.
The research has been conducted by The Private Office (TPO), which undertook a review of average property prices across 372 local authorities, along with average pension wealth ahead of the inclusion of pensions in IHT calculations from 6th April 2027, to arrive at the suggested 288 areas where the value of both is greater than the current £3250,000 nil rate band. Pension estimates are derived from median earnings data by area.
London and the South East are most affected, where average inheritance tax liabilities are “well into six figures”. The result, said Pippa Vick, financial Adviser at TPO, is IHT becoming a “property tax by default”.
She added: “Many families don’t consider themselves wealthy, yet long-term house price growth, particularly in London and the South East, means their estates can face substantial tax bills.
“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.”
There are 136 local authorities already exposed to inheritance tax in 2026 as a result of average property values alone, with estimated average liabilities ranging from just over £150 to more than £340,000 per estate. The inclusion of pension wealth in 2027 potentially brings an additional 152 areas into scope with an average pension wealth taken into account, TPO suggests.
Kensington and Chelsea ranks as the UK’s most expensive inheritance tax hotspot, with an average property value of £1.18 million. With median earnings of £45,600, TPO estimates an average pension of £153,216.00, meaning the total average estate values exceeds £1.3 million and the estimated IHT liability is £343,924 per estate.
| Country | Local authorities | Average Property Value (Nov 2025) | Estimated Inheritance Tax Due in 2026 |
| England | Kensington and Chelsea | £1,184,811.00 | £343,924.40 |
| England | Camden | £800,930.00 | £190,372.00 |
| England | Elmbridge | £769,277.00 | £177,710.80 |
| England | Richmond upon Thames | £767,961.00 | £177,184.40 |
| England | Hammersmith and Fulham | £738,593.00 | £165,437.20 |
| England | Wandsworth | £688,570.00 | £145,428.00 |
| England | Islington | £685,840.00 | £144,336.00 |
| England | City of London | £662,392.00 | £134,956.80 |
| England | Hackney | £625,292.00 | £120,116.80 |
| England | Haringey | £613,428.00 | £115,371.20 |
| England | St Albans | £610,525.00 | £114,210.00 |
| England | Merton | £608,575.00 | £113,430.00 |
| England | Barnet | £603,111.00 | £111,244.40 |
| England | Southwark | £596,674.00 | £108,669.60 |
| England | Kingston upon Thames | £582,206.00 | £102,882.40 |
| England | Three Rivers | £581,751.00 | £102,700.40 |
| England | Windsor and Maidenhead | £577,038.00 | £100,815.20 |
| England | Waverley | £570,878.00 | £98,351.20 |
| England | Ealing | £568,166.00 | £97,266.40 |
| England | Mole Valley | £558,220.00 | £93,288.00 |
Trafford is the only northern authority appearing in the dataset, with an estimated average inheritance tax liability of around £20,814, significantly below the levels seen in southern hotspots.
Across the UK, inheritance tax receipts have already reached £8.25 billion in 2024/25 and are projected to exceed £9 billion by 2026/27.
One Response
This is exactly why clients benefit from taking a strategic, long‑term approach to managing their estate. Early planning using trusts, lifetime gifting, pension strategy, and structured asset protection can significantly reduce exposure and ensure more of their hard‑earned wealth passes to the people they care about.
IHT shouldn’t be an unavoidable consequence of owning a home. With the right advice and a proactive plan, families can take control rather than be caught out by default taxation.