The average cost of dying is increasing, with combined funeral expenses and inheritance tax (IHT) liabilities in the UK now averaging over £225,000 per estate. In the capital, this figure is nearly £300,000 as London faces the UK’s highest end-of-life-costs. Around £8.3bn is expected to be claimed in IHT in 2025, a figure that’s growing year-on-year. From the beginning of April 2027, estates within the £325,000 IHT threshold will be expected to pay a 40% tax.
A new analysis from pensions advisors Almond Financial, using tax data by the Office for National Statistics (ONS), shows the regional cost of dying across the UK. London was revealed to have the highest average IHT, standing at £275,330 to pay after a relative dies - bringing the average cost of dying up to £286,592, including funeral fees.
The average cost of a funeral in Britain is approximately £9,729, including the funeral itself, professional fees, and additional send-off costs, such as flowers, catering, venue hire and a memorial.
In London, funerals cost an average of £10,962 - the highest in the UK.
All the southern regions - including the South East and the South West - were revealed as having among the highest average inheritance tax bills for liable estates from 2021-2022, standing at over £210,000.
Funeral fees bring liable estates in southern regions into the top five for the true cost of dying.
The report shows that estates in the North, West and East Midlands rank towards the lower end of the table. Although costs are still increasing, these areas face slightly lower liabilities, averaging between £175,000 to £189,000.
Principal financial advisor Sam Robinson explained how proper planning may help ease the process's stress.
“If you think you’re going to be within the new IHT threshold, it’s important to look at ways of reducing it before it gets to this stage,” he said. The financial expert said to consider setting up life insurance covering IHT liability.
Mr Robinson said another option is “gifting assets to spouses as they are IHT-free or potentially gifting money to loved ones as the financial transfers are exempt from the estate”.
