According to research by estate agent Savills, the "baby-boomer" generation in the UK (homeowners aged 62 to 80) is sitting on £3.84 trillion in property wealth. Approximately £2.92 trillion of that is held in main family homes, with the rest in buy-to-let property investments and other residential properties such as second homes.
For context, the UK's entire annual gross domestic product, the total value of all goods and services produced in Britain each year, is just over £3 trillion. UK over-60s now hold more property wealth than the country's entire economic output for a year.
Lucian Cook, Head of Residential Research at Savills, noted that housing has become a massive store of wealth in the UK, particularly for older homeowners who hold high proportions of both owner-occupier and buy-to-let housing wealth. Much of it is concentrated in London and the South East, where owner-occupiers aged 60 plus hold just over £1 trillion in net housing wealth.
Property might be the biggest asset for many families, but it's only one part of the wider picture. How it sits alongside other investments, pensions and future plans matters enormously, particularly when it comes to inheritance tax.
Why this concentration of property wealth matters
Rising property values, combined with frozen tax thresholds, are quietly pulling more families into the inheritance tax (IHT) net than ever before.
The standard inheritance tax nil-rate band has been fixed at £325,000 since 2009. The Government has confirmed it is scheduled to remain unchanged until at least 2031. That's over twenty years of frozen thresholds against a backdrop of substantial house price growth.
Result: estates that would once have fallen well below the threshold are now being drawn into IHT scope. Often without the family realising until probate.
When the family home tips the balance
For many UK households, the family home is the largest single asset they own. Research shows that property can account for nearly half of the wealth in estates paying inheritance tax in London, with similarly high proportions across the South East and East of England.
This means even families who don't consider themselves particularly wealthy may find the value of their home alone pushes their estate above the IHT threshold.
The numbers reflect the trend. HMRC collected £7.7 billion in IHT during the first eleven months of the 2025-26 tax year. The Office for Budget Responsibility forecasts continued increases in IHT receipts over the next few years, largely driven by frozen thresholds combined with rising asset values.
How UK inheritance tax actually works
Inheritance tax is charged at 40% on the value of an estate above the available nil-rate bands.
The reliefs available are:
- Standard nil-rate band: £325,000 per individual
- Residence nil-rate band: up to £175,000 additional, when a main residence is passed to direct descendants (children, grandchildren or step-children)
- Spouse/civil partner transfer: unused allowances can transfer to a surviving spouse or civil partner. A married couple can therefore potentially pass on up to £1 million tax-free combined
- Seven-year rule: gifts made more than seven years before death are generally outside the estate for IHT purposes
However, the residence nil-rate band has its own limits. It begins to taper for estates above £2 million, and is lost entirely for estates above £2.35 million (or £2.7 million combined for couples). For families whose property is the largest asset, but whose estate exceeds these thresholds, the relief that should help them is being eroded by the asset that's pushing them over.
What's changing from April 2027
One additional change is worth flagging. From April 2027, unused pension funds will become part of the estate for inheritance tax purposes, reversing the previous treatment that allowed pensions to be passed on outside the estate. For families who had been planning to pass on pension wealth in addition to property wealth, this is a meaningful shift that calls for review.
Why planning matters now
For families whose estate may be approaching the IHT threshold, the key step is simply understanding the potential exposure early. Once a death occurs, options narrow significantly. Lifetime planning gives far more flexibility:
- Lifetime gifting can move wealth out of the estate, subject to the seven-year rule
- Trust structures can hold assets outside the estate while preserving family control
- Investment in qualifying business assets or AIM-listed shares can attract Business Property Relief
- Whole-of-life insurance held in trust can fund the IHT bill without itself being taxed
- Charitable giving reduces the taxable estate and can lower the IHT rate from 40% to 36% if 10% or more of the net estate goes to charity
None of these are right for every family. Each has implications, costs and trade-offs that need careful thought. But the earlier the conversation starts, the more options are genuinely available.
Thinking about the next generation
Inheritance planning isn't just about reducing tax. It's about making sure your estate passes on in a way that feels right for you and your family. The family home often carries deep personal meaning alongside its financial value, and understanding how it fits into your overall plan can bring real peace of mind.
For families with substantial property wealth, the conversation usually starts with three questions:
- What does the estate look like today, and what might it look like in ten or twenty years?
- Who do you want to receive what, and when?
- What's the tax position likely to be, and what options exist to manage it?
That conversation is often easier to have with an independent adviser than alone. It also tends to involve a solicitor and sometimes a tax specialist, coordinating across these professionals is part of what we do.
Frequently asked questions
How much property wealth is held by UK over-60s?
According to research by Savills, UK homeowners aged 62 to 80 hold £3.84 trillion in property wealth. Approximately £2.92 trillion of this is held in main family homes, with the rest in buy-to-let investments and second homes. For context, the UK's entire annual gross domestic product is just over £3 trillion.
What is the UK inheritance tax threshold in 2026?
The standard inheritance tax nil-rate band has been frozen at £325,000 since 2009 and is currently scheduled to remain unchanged until at least 2031. An additional residence nil-rate band of up to £175,000 may apply when a main residence is passed to direct descendants, bringing the potential combined threshold to £500,000 per individual, or £1 million for a married couple or civil partners.
Why are more UK families facing inheritance tax?
Two factors are pulling more estates into scope: house prices have risen materially over the past fifteen years, while the inheritance tax nil-rate band has been frozen at £325,000 since 2009. HMRC collected £7.7 billion in IHT receipts during the first eleven months of the 2025-26 tax year, and receipts are forecast to continue climbing. Property typically accounts for a substantial proportion of estate value in London and the South East, often pushing estates above the threshold.
How is inheritance tax calculated in the UK?
Inheritance tax is charged at 40% on the value of an estate above the available nil-rate bands. The standard nil-rate band is £325,000. An additional residence nil-rate band of up to £175,000 may apply when a main residence is passed to direct descendants. Unused allowances can transfer to a surviving spouse or civil partner. Gifts made more than seven years before death are generally outside the estate. Specialist tax advice is recommended for estate planning.
Can I reduce my inheritance tax liability on my home?
Several planning options exist, including making use of the residence nil-rate band by leaving the home to direct descendants, lifetime gifting that survives the seven-year rule, equity release strategies in specific circumstances, and trust structures. Each carries different implications and costs. Advice should be taken from a qualified financial adviser, working alongside a tax specialist and solicitor where appropriate. The Financial Conduct Authority does not regulate Wills, Trusts, Tax advice or Cash Flow Planning.
Sources: Savills Research; Office for Budget Responsibility, Inheritance Tax forecasts; GOV.UK, Inheritance Tax thresholds; HMRC Annual Receipts publications.