Inheritance tax (IHT)

Analysis by The Telegraph reveals that a single London borough pays more inheritance tax (IHT) than both Wales and Northern Ireland combined. In the 2019/20 tax year, Londoners paid the highest amount of IHT, totaling £1.3 billion, with an average tax bill of over £300,000. In contrast, residents of the borough of Barnet alone paid £104 million, while Wales and Northern Ireland paid £97 million and £42 million, respectively. The significant variations in property wealth across different regions of Britain have resulted in a stark geographical divide when it comes to this death duty. 

The South East, with its rising house prices over the past decade, contributed over £1 billion in death duties. This increase in property values has led to a growing number of ordinary families being caught up in the inheritance tax net. The minimum inheritance tax allowance has remained at £325,000 since 2009, and an additional tax-free allowance of £175,000 is available if a main residence is passed down to children or grandchildren. 

Forget Rightmove, Hinge Might be Your Ticket to Buying in London 

House prices in London are falling, and it may seem like the perfect opportunity for private renters to jump into the property market. However, a closer look at the numbers reveals a different story. The average price of London homes has dropped to £536,622, but realistically, you’ll still need a substantial deposit, fees, and stamp duty to secure a property. Mortgage requirements have become stricter, making it harder to obtain financing, and even with a 15% deposit, you’ll need an income of £101,360 to afford a mortgage. 

For many single individuals, these figures make buying a home in London nearly impossible. In fact, data shows that the majority of first-time buyers are now purchasing homes jointly with a partner. If you’re single and renting, it might be wiser to invest in your love life this summer than to save for a deposit. 

While finding a romantic partner shouldn’t be the sole reason for buying a property, the reality is that it might be faster to find love and purchase a home together than to save enough money to buy on your own. However, it’s important not to rush into a relationship solely for the sake of affordability. Being trapped in an unhappy or unhealthy relationship is far worse than dealing with the challenges of saving for a deposit. 

Alternatively, consider partnering with a trusted friend or sibling to navigate the property market. Building a co-buying arrangement based on trust and reliability can be a sensible choice that doesn’t sacrifice romance until you’re ready. This approach could be valuable not only for singles but also for established couples seeking financial stability in their property purchases. 

Experts are warning that the burden of inheritance tax in the UK is driving the departure of wealthy individuals from the country. Financial advisers have revealed that thousands of affluent individuals are making plans to acquire domicile status in tax havens such as Monaco, Switzerland, and Dubai. This exodus is fueled by concerns over the growing tax burden, which is projected to reach its highest level since World War II. The Telegraph is currently campaigning to abolish the divisive 40% death duty, with more than 50 Members of Parliament, including Liz Truss and Nadhim Zahawi, supporting the cause. Lord Frost has also expressed his support, emphasizing the need to reduce the tax burden and cut spending. 

Private client partners and tax advisers to high-net-worth individuals have echoed these concerns. They report that wealthy clients are relocating abroad to escape inheritance tax, often in their 40s and 50s, taking their lucrative businesses with them. This brain drain phenomenon is expected to have a significant impact on the country. The migration of the best and brightest individuals to other countries not only deprives the UK of their tax contributions but also undermines its talent pool. 

The rising tax burden has led to an outflow of millionaires from the UK, according to research conducted by Henley & Partners and New World Wealth. Their study revealed that over 12,000 wealthy individuals have left the country since 2017. International tax and migration advisers note that some clients are even leaving to avoid the tax implications of dying while residing in the UK. The uncertainty surrounding the event of death and the associated tax consequences prompt individuals to seek residency in other countries where inheritance tax is more favorable. 

Lawyers specializing in taxation also highlight the discrepancy in the burden falling on “born and bred” Britons rather than foreigners living in the UK who carefully avoid becoming domiciled to sidestep British inheritance tax laws. They predict that more people may choose to move abroad as the basic threshold for inheritance tax has remained unchanged since 2010 while the tax revenue continues to increase annually. 

Bayswater, the neighborhood north of Hyde Park in prime London, is experiencing a surge in values and recognition as several transformative projects take shape as reported by Prime Resi. Traditionally underrated, Bayswater is now making a bid for elite status, outperforming its neighboring areas of Knightsbridge and Belgravia. 

Historically, Bayswater has seen limited high-end development activity, with super-prime new builds accounting for only 8% of all £5 million sales since 2016, compared to an average of 28% in neighboring parkside areas. However, recent statistics show a shift in fortunes for Bayswater. 

Savills found that the median price per square foot (psf) in Bayswater was just over £1,300 based on 2022 sales, compared to an average of nearly £1,800 in other areas around Hyde Park. Over the past decade, Bayswater has experienced a price growth of around a third, with a recent acceleration in value. In contrast, more traditional prime areas like Knightsbridge and Belgravia have seen values decline. 

The revitalization of Bayswater can be attributed to several key factors. Its proximity to the new Elizabeth line at Paddington and a £3 billion private and public regeneration program have brought a level of commitment and investment previously unseen in the area. A comparison is drawn with the transformation of Marylebone, which has become one of prime central London’s top hotspots due to investment in public spaces, retail offerings, and the local community. 

Additionally, Bayswater has attracted buyers seeking more space for their money during the pandemic and a desire for nearby green spaces. The developments of Park Modern, The Whiteley, and No. 18 Porchester Gardens are seen as “game changers,” offering aspirational living, revamped retail spaces, and a world-class hotel and spa. Developers are also eyeing further opportunities in the area, with plans for 273 private new homes to be delivered in the next five years and potential redevelopment projects underway. 

According to Savills, Bayswater is well on its way to catching up with its prime London neighbors, thanks to improved public spaces, enhanced connectivity, and ongoing new build developments. The area possesses significant potential for change and is considered one of the few pockets of prime central London with such prospects. 

Stories about the inheritance tax (IHT) 

The Telegraph has been actively campaigning to abolish the 40% death tax, gaining support from over 50 Members of Parliament. The main inheritance tax (IHT) tax-free allowance in the UK has remained unchanged for 14 years, resulting in more Britons being drawn into the tax’s reach over the past decade.  

In a campaign led by the publication, readers have shared their personal stories regarding the impact of IHT on their lives. 

Readers have expressed their concerns about the allocation of funds raised through IHT, which they feel are used for generous pension schemes for public sector workers. Stories also highlight issues related to delays in the probate process, resulting in interest charges on outstanding IHT bills. Some readers have borrowed money or faced financial pressure to settle substantial tax bills before accessing their loved ones’ estates. 

The campaign launched by The Telegraph seeks to challenge the government’s stance on inheritance tax and generate awareness about its impact on families across the country.