Inheritance Tax Planning in Highgate: Protecting Family Wealth in One of North London’s Most Prestigious Neighbourhoods
- Belgravia Capital
- Jun 12
- 5 min read
Updated: Jul 2
With its historic architecture, sweeping views over London, and easy access to Hampstead Heath, Highgate remains one of the capital’s most desirable residential areas.
From the grand Georgian terraces of Highgate Village to the elegant villas of Holly Lodge Estate and the leafy avenues of Southwood Lane, this North London enclave attracts wealthy professionals, entrepreneurs, and long-standing family dynasties.
But as property prices in Highgate continue to rise, so too does exposure to inheritance tax (IHT). For many families, homes purchased decades ago for a fraction of their current value now form the core of a multi-million-pound estate, often without the liquidity to pay the resulting tax bill.
Without careful planning, heirs may be forced to sell prized family homes or assets simply to cover a 40% inheritance tax liability.
At Belgravia Capital Wealth Management, we help Highgate families navigate this risk through proactive, intelligent estate planning.
In this guide, we explain why IHT is now a critical issue for families in Highgate and the practical steps you can take to protect your wealth and your legacy.
Why Inheritance Tax Is a Growing Risk in Highgate
Inheritance tax thresholds have been frozen since 2017:
The nil-rate band remains at £325,000 per person.
The residence nil-rate band adds a further £175,000 per person when leaving your main home to children or grandchildren.
Couples can combine allowances for a maximum of £1 million tax-free inheritance.
However, estates exceeding £2 million begin to lose the residence nil-rate band, tapering away until it disappears completely at £2.35 million.
In Highgate, this taper now affects a significant proportion of families:
Detached homes on Southwood Lane, Highgate West Hill, and Stormont Road routinely sell for £4 million to £10 million+.
Period townhouses around Highgate Village frequently exceed £3 million to £5 million.
Modern luxury apartments and homes on private roads such as Courtenay Avenue often surpass £10 million.
Many residents also hold substantial pensions, ISAs, and international assets.
As a result, most Highgate estates are now exposed to significant inheritance tax, often without a clear plan in place.
A Typical Highgate Inheritance Tax Example
Consider a couple who bought a £5 million townhouse in Highgate Village in the 1990s. They also hold:
£1 million in pensions.
£1 million in ISAs and investments.
£500,000 in art, antiques, and personal possessions.
Their total estate is now worth £7.5 million.
Because the estate exceeds £2.35 million, the couple loses the residence nil-rate band, leaving only the £650,000 nil-rate band available.
This means £6.85 million is taxable at 40%, resulting in a potential inheritance tax bill of £2.74 million.
Without proactive planning, the family could be forced to sell their treasured Highgate home to pay HMRC.
Why Highgate Families Must Plan for IHT Early
Many Highgate families are:
Asset-rich but cash-poor, with wealth concentrated in property.
Owners of multi-generational family homes they wish to preserve.
Holders of complex estates, including UK and international assets.
Facing significant inheritance tax exposure without adequate liquidity to cover the bill.
By acting early, often years before probate is required, families can significantly reduce or eliminate their inheritance tax liability.
At Belgravia Capital Wealth Management, we help Highgate families develop bespoke inheritance tax strategies to protect their wealth and safeguard their legacy.
Key Inheritance Tax Planning Strategies for Highgate Families
Lifetime Gifting
Gifting during your lifetime is one of the most effective ways to reduce inheritance tax exposure.
You can give away £3,000 per year tax-free and carry forward one unused year.
Small gifts of up to £250 per person per year are also exempt.
Larger gifts are treated as potentially exempt transfers, provided you survive seven years, they fall outside your estate.
In Highgate, we often advise families to gift:
Surplus income - tax-free if structured correctly.
Cash and investments.
Shares in family companies.
Art, antiques, and other valuable personal items.
Property interests, where appropriate.
Using Trusts to Protect Wealth
Trusts enable families to move assets out of their estate while retaining control over how they are used.
Common trust structures include:
Discretionary trusts - offering flexibility for multi-generational planning.
Bare trusts - suitable for direct gifts to adult children.
Interest-in-possession trusts - providing income to one generation while protecting capital for the next.
Trusts are particularly valuable for:
Preserving the residence nil-rate band when an estate is near the £2 million taper point.
Protecting family wealth from divorce, bankruptcy, or poor financial management.
Passing on complex or international assets in a controlled manner.
Whole-of-Life Insurance to Provide Liquidity
A whole-of-life insurance policy, written in trust, provides a tax-free payout to cover inheritance tax.
This ensures that your heirs are not forced to sell the family home or other prized assets simply to pay HMRC.
In Highgate, where wealth is often asset-rich but illiquid, this is one of the most effective ways to protect multi-generational family homes.
Pension Planning
Pensions offer significant inheritance tax advantages:
Defined contribution pensions sit outside your estate for IHT purposes.
If you die before age 75, pensions can be inherited tax-free.
If you die after 75, beneficiaries pay income tax on withdrawals, but no IHT.
We frequently help Highgate families:
Optimise pension death benefit nominations.
Structure pensions for international heirs.
Combine pensions strategically with other assets to manage inheritance tax.
Business Property Relief (BPR)
If you own a qualifying business or AIM-listed shares, you may be eligible for Business Property Relief, reducing IHT on those assets by up to 100%.
However, from April 2026, BPR will be capped at £1 million per person, so now is the time to act.
Many Highgate families own:
Private businesses.
Interests in international companies.
AIM-listed investment portfolios.
We advise on structuring these assets effectively within your estate plan.
Common Inheritance Tax Mistakes to Avoid
Highgate families often fall into the same traps:
Underestimating estate value
It’s common to overlook:
The full current value of Highgate property.
International bank accounts and assets.
Art, jewellery, and collectibles.
Life insurance not held in trust.
Outdated wills
Older wills may not reflect modern IHT allowances or the needs of complex families.
Ignoring the £2 million taper
With careful planning, estates close to this threshold can retain valuable reliefs.
Holding life insurance outside trust
This unnecessarily increases your taxable estate.
Failing to optimise pensions
Pensions are one of the most powerful - and underused - IHT planning tools.
Why Local Expertise Matters for Inheritance Tax Planning
Highgate presents unique inheritance tax challenges:
Exceptionally high property values.
Long-standing multi-generational family wealth.
Complex estates with UK and international assets.
Many international families with cross-border tax issues.
Families wishing to preserve historic Highgate homes.
At Belgravia Capital Wealth Management, we provide bespoke inheritance tax planning specifically for Highgate families.
We understand:
The local property market.
The nuances of family wealth dynamics.
How to integrate UK inheritance tax planning with international estate planning.
Next Steps for Highgate Families to Mitigate IHT
If you own a high-value home in Highgate, particularly in:
Highgate Village.
Southwood Lane.
Highgate West Hill.
Courtenay Avenue.
Stormont Road.
Holly Lodge Estate.
… your estate is almost certainly exposed to inheritance tax.
Now is the time to act:
Have your full estate professionally valued.
Review and update your will.
Consider lifetime gifts and trust structures.
Explore insurance options to provide liquidity.
Optimise pensions for maximum tax efficiency.
Plan around upcoming Business Property Relief changes.
Conclusion: Protect Your Highgate Legacy from Inheritance Tax and HMRC
Inheritance tax is no longer a niche concern in Highgate, it is now a mainstream risk for the vast majority of local families.
But with expert, proactive planning, you can ensure your wealth passes to those you care about, not to HMRC.
At Belgravia Capital Wealth Management, we help Highgate families take control of inheritance tax with clarity and confidence.
Contact us today to begin protecting your family legacy.
020 3916 5954
