House Prices and Inheritance in the UK

Q: Does where I live change the inheritance tax risk on my home?

Region affects how far the thresholds stretch. A GBP 325,000 nil-rate band covers most of a typical North East home at GBP 163,190 but a smaller share of a London home at GBP 552,655 (UK HPI, April 2026, gov.uk). Inheritance tax itself applies UK-wide on broadly the same basis (gov.uk, as at July 2026, subject to change), so the difference comes mainly from local prices.

House prices and inheritance are linked through one number that has not moved. The main inheritance tax threshold has been fixed at £325,000 since 6 April 2009, while the average UK home was valued at £270,000 in April 2026 (gov.uk, IHT thresholds, as at July 2026, subject to change; UK House Price Index, April 2026, gov.uk).

This page brings together the official numbers on where those two lines meet: house prices from the UK House Price Index, and inheritance tax outcomes from HMRC's own statistics. House price figures are for April 2026 and are provisional. Inheritance tax outcome figures are for the 2022 to 2023 tax year, the latest detailed data. Tax thresholds are as at July 2026 and subject to change.

Key figures at a glance

In the 2022 to 2023 tax year, 4.62% of UK deaths resulted in an inheritance tax charge, covering 31,500 taxpaying estates, with liabilities of £6.70 billion (HMRC Inheritance Tax liabilities statistics, 2022 to 2023, gov.uk). The table below sets each headline statistic beside its source and reference period.

Statistic	Figure	Source & period
Average UK house price	£270,000	UK HPI, gov.uk, Apr 2026
Annual UK house price change	+3.8%	UK HPI, gov.uk, Apr 2026
Average house price, London (highest region)	£552,655	UK HPI, gov.uk, Apr 2026
Average house price, North East (lowest region)	£163,190	UK HPI, gov.uk, Apr 2026
Nil-rate band (unchanged since 6 April 2009)	£325,000	gov.uk, as at Jul 2026
Share of UK deaths with an IHT charge	4.62%	HMRC, 2022-23
Taxpaying IHT estates	31,500	HMRC, 2022-23
IHT liabilities created	£6.70bn	HMRC, 2022-23

Figures are quoted as published by the named sources, including their own rounding. House prices are UK-wide and provisional from the UK House Price Index; inheritance tax outcomes are from HMRC and cover the whole UK.

The trend over time

Each of the headline inheritance tax measures rose in the latest year of data. The number of taxpaying estates, the share of deaths charged, and the total liabilities all increased in 2022 to 2023 compared with 2021 to 2022, which HMRC links to rising asset values and the decision to hold thresholds at their 2020 to 2021 levels (HMRC Inheritance Tax liabilities statistics, 2022 to 2023, gov.uk).

Measure	2022-23 level	Change on prior year
Taxpaying IHT estates	31,500	+3,700 (+13%)
Share of UK deaths charged	4.62%	+0.23 percentage points
IHT liabilities created	£6.70bn	+£0.71bn (+12%)

Source: HMRC Inheritance Tax liabilities statistics, 2022 to 2023, gov.uk, accessed July 2026. Changes are stated as published and are not extrapolated to later years.

How housing feeds in. HMRC notes that in taxpaying estates worth under £1 million, residential property and cash make up the primary holdings, while securities and other assets weigh more heavily in larger estates (HMRC, 2022 to 2023, gov.uk). For many families, then, the home is the asset that pushes an estate toward the threshold rather than share portfolios. Prices and estate values move over time, so this is context rather than a forecast for any one household.

A fixed threshold and rising prices pull in the same direction: over time, a home that once sat comfortably below the nil-rate band can move closer to it.

Analysis

What the numbers mean

Read together, the data describes a slow drift rather than a sudden shift. In 2022 to 2023, fewer than five deaths in a hundred led to an inheritance tax charge, so the tax still reached a minority of estates (HMRC, 2022 to 2023, gov.uk). In our reading, the more useful signal is the direction of travel, not the level in any single year.

A few observations, offered as general commentary rather than advice:

Region shapes exposure. A £325,000 nil-rate band covers far more of a typical North East home at £163,190 than a typical London home at £552,655 (UK HPI, April 2026, gov.uk). Where a single home approaches or exceeds the available thresholds, more of an estate can fall within the charge, depending on the whole picture.
Frozen bands meet rising values. The main thresholds are held until the end of the 2030 to 2031 tax year, while the average UK home rose 3.8% in the year to April 2026 (gov.uk, as at July 2026, subject to change; UK HPI, April 2026, gov.uk). Where prices rise while thresholds stay flat, more estates can be drawn in over time, though whether any estate pays depends on its circumstances.
Owning a valuable home is not the same as owing tax. Married couples and civil partners can usually pass assets to each other tax free, unused thresholds can transfer to the survivor, and a couple may pass on up to £1,000,000 in some cases where a home goes to descendants (gov.uk, as at July 2026, subject to change). The outcome turns on the full estate, not the house alone.

None of this points to a single course of action, and the figures can change. Many people find it worth discussing their own position with a qualified professional who can look at the whole estate. Our estate planning guide sets out how the parts fit together, and our page on property wealth by region looks at where housing wealth sits across the UK.

How the thresholds work

A valuable home does not automatically mean an inheritance tax bill. The standard rate is 40%, charged only on the part of an estate above the available tax-free thresholds, with a reduced 36% rate where at least 10% of the net estate passes to charity (gov.uk, as at July 2026, subject to change). The bands below apply UK-wide, though succession law differs by nation.

Allowance or rate	Level (July 2026)
Nil-rate band (per person)	£325,000
Residence nil-rate band (per person)	Up to £175,000
Combined per person (home to descendants)	Up to £500,000
Combined per couple	Up to £1,000,000
Standard rate	40%
Reduced rate (10%+ of net estate to charity)	36%
Residence band taper threshold	£2,000,000

Source: gov.uk/inheritance-tax, as at July 2026, subject to change. Thresholds are frozen until the end of the 2030 to 2031 tax year (gov.uk).

The residence nil-rate band tapers away where an estate is worth more than £2,000,000, reducing by £1 for every £2 above that line (gov.uk, as at July 2026, subject to change). Because a fixed threshold covers more of a lower-value home than a higher-value one, the regional price gap feeds directly into how far these allowances stretch. Our guide to Inheritance Tax Explained works through the bands in more detail.

House prices and inheritance across the UK nations

The UK House Price Index covers all four nations, compiled from HM Land Registry, Registers of Scotland and Land and Property Services Northern Ireland (UK HPI, April 2026, gov.uk). Inheritance tax also applies UK-wide on broadly the same basis, and HMRC's outcome statistics cover the whole UK. Succession law, though, differs: Scotland has its own rules, including legal rights that can entitle a spouse and children to a fixed share of an estate, and it uses confirmation rather than a grant of probate. Northern Ireland runs a separate but broadly similar system to England and Wales. Where an estate crosses jurisdictions, it can be worth taking advice in each.

Sources and methodology

Every statistic on this page comes from a named official source and has been checked against the current publication. House prices are from the UK House Price Index; inheritance tax outcomes are from HMRC; tax thresholds and rates are from gov.uk.

UK House Price Index summary, April 2026 (reference period April 2026, provisional): average UK price, annual change, and regional prices for London and the North East. Compiled by ONS from Land Registry data. gov.uk
HMRC Inheritance Tax liabilities statistics, commentary (reference tax year 2022 to 2023): taxpaying estates, share of UK deaths charged, liabilities created, and asset composition by estate size. gov.uk
gov.uk, Inheritance Tax thresholds and interest rates (as at July 2026, subject to change): the £325,000 nil-rate band and its start date of 6 April 2009. gov.uk
gov.uk, How Inheritance Tax works and the 2028 threshold publication (as at July 2026, subject to change): rates, residence nil-rate band, taper, and the freeze to 2030-31. gov.uk/inheritance-tax; gov.uk

Figures are quoted as published, including the publishers' own rounding, and are not extrapolated beyond what each source states. House price indices are revised in later releases and HMRC estate statistics are updated annually, so it can be worth checking the latest data before relying on a figure.

Frequently asked questions

Do rising house prices increase inheritance tax?

They can, because the main thresholds are fixed in cash terms while home values move. The nil-rate band has stood at £325,000 since 6 April 2009 (gov.uk, as at July 2026, subject to change). HMRC links recent increases in taxpaying estates partly to rising asset values alongside frozen thresholds (HMRC, 2022 to 2023, gov.uk). Whether any estate pays depends on its full circumstances.

What share of estates pay inheritance tax in the UK?

A minority. In the 2022 to 2023 tax year, 4.62% of UK deaths resulted in an inheritance tax charge, covering 31,500 taxpaying estates (HMRC Inheritance Tax liabilities statistics, 2022 to 2023, gov.uk). That share rose by 0.23 percentage points on the prior year, so most estates still paid no inheritance tax, though the proportion has been edging up.

Will my house be counted for inheritance tax?

The value of a home generally forms part of the estate for inheritance tax, but each person has a nil-rate band of £325,000 plus a residence nil-rate band of up to £175,000 where a home passes to direct descendants (gov.uk, as at July 2026, subject to change). A couple may pass on up to £1,000,000 in some cases, so a home can be within the thresholds depending on the whole estate.

How much has the inheritance tax threshold risen with house prices?

It has not risen at all. The nil-rate band has been fixed at £325,000 since 6 April 2009 and is currently held until the end of the 2030 to 2031 tax year (gov.uk, as at July 2026, subject to change). Over that time the average UK house price reached £270,000 in April 2026 (UK HPI, April 2026, gov.uk), so the gap has narrowed.

Does where I live change the inheritance tax risk on my home?

Region affects how far the thresholds stretch. A £325,000 nil-rate band covers most of a typical North East home at £163,190 but a smaller share of a London home at £552,655 (UK HPI, April 2026, gov.uk). Inheritance tax itself applies UK-wide on broadly the same basis (gov.uk, as at July 2026, subject to change), so the difference comes mainly from local prices.

Is the house price and inheritance data the same across the UK?

The UK House Price Index covers all four nations, drawing on Land Registry, Registers of Scotland and Land and Property Services Northern Ireland (UK HPI, April 2026, gov.uk). HMRC's inheritance tax outcome figures also cover the whole UK (HMRC, 2022 to 2023, gov.uk). Succession law differs by nation, so the process after death is not identical everywhere.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Statistics are quoted from the named official sources for the reference periods shown, and figures and tax rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.