Findings From Irwin Mitchell's IHT Report

Some of England’s smallest cities are expected to be amongst the next inheritance tax (IHT) hotspot, says a new report published by Irwin Mitchell Private Client Advisory.

The study also forecasts that `under-the-radar’ northern locations such as those within the Hull and Carlisle postcode areas, will emerge as significant areas of IHT growth partly due to rising property values, and regional investment.

The study is based on an HMRC Freedom of Information request covering 177,000 IHT estates across all 121 UK postcodes*.

According to the report’s forecasts, the wealthy cathedral cites of Truro and Salisbury, with a joint population of less than 70,000, could outpace larger counterparts in terms of growth in numbers of IHT liable estate by the end of 2027- resulting in six-figure tax bills.

Irwin Mitchell’s study also reveals northern cities outside the usual wealth hubs, such as Hull and Carlisle, are predicted to be among the top 10 by the end of 2027.

Expert Opinion

“While large metropolitan areas like London, Manchester, and Birmingham are expected to see the most IHT growth due to high property values and wealth concentration, smaller cities are now emerging as new hotspots. These areas, traditionally seen as more affordable, are experiencing rising property values and increased investment, making them significant areas of IHT exposure. In the case of the top 10 of locations for growth in IHT liable estates, over half are predicted to have associated tax bills which are below the national average. However, the fact we’re seeing a sharp rise in inheritance tax exposure in cities like Hull and Carlisle is significant.

“These are places that have traditionally been seen as more affordable, but rising property values, regional investment, and demographic shifts are changing that. It shows that IHT is no longer just a concern for wealthy families - it’s becoming a reality for middle-income households across the UK. The geography of wealth is evolving, and inheritance tax is following it.”
Andrea Jones, National Head of Irwin Mitchell’s Private Client Advisory team

Other Key Findings from the Report:

- The total amount of IHT liable in the UK is predicted to reach £9bn by 2026/27 rising from £5.5bn in 2021/22.

- Total amount of IHT in Greater London is predicted to grow by 54% between 2022 and 2027, increasing to £2.6bn a year.

- In 2026/27 Greater London could have 9,400 estates that are liable for IHT - representing a 43% rise compared to 2021/22.

- Ten UK postcodes expected to see the number of IHT liable estates double between 2021/22 and 2026/27.

- Average IHT bill in Greater London expected to be £275,000 by 2026/27 and even higher in Inner London (£340,000).

- Leeds, Manchester, and Birmingham are all seeing double-digit increases in the percentage of estates liable for Inheritance Tax.

From April 6, 2026, significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) will take effect, capping full 100% relief at £1 million for combined qualifying assets, with amounts above this threshold receiving only 50% relief. AIM-listed shares will also see reduced BPR eligibility. The Office for Budget Responsibility estimates that 130 estates will be affected by APR changes and 1,440 by BPR, generating an additional £200 million in tax revenue in 2026/27.