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Inheritance tax hits £2.6bn

A HUGE amount of the UK's inheritance tax is paid by a relatively small number of people, it has been claimed.

Analysis of HM Revenue and Customs (HMRC) figures by insurer Prudential found that of the £2.6 billion worth of inheritance tax receipts recorded in the financial year 2010/11, around £1.3 billion related to London and the South East.

In London, where property values tend to be much higher than in the rest of the UK, the average amount paid out for an estate that is liable to inheritance tax is £234,400, while the South East has the second highest average tax bill at £174,200.

This compares with a typical figure of £154,000 in Scotland, £126,000 in Wales and £135,000 in Northern Ireland.

The average bill paid across the UK in 2010/11 was £165,700 and 15,600 estates were liable, with two-fifths (42%) of these being in London and the South East.

HMRC reviewed nearly 260,000 estates in the 2010/11 tax year, meaning only around one in 16 (6%) of all estates was liable to pay inheritance tax, which Prudential said is a similar figure to previous years.

A recent Office for National Statistics (ONS) report found that people who receive an inheritance were more likely to live in a wealthier household, have a management-level job own their own home and have a university educated father.

Women have a better chance of inheriting as they tend to outlive men.

Graeme Robb, a tax specialist at Prudential, said: "These figures reveal that a huge amount of inheritance tax is paid by a relatively small number of people."

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