Could the South West’s ageing population create an inheritance bottleneck?

The South West has spent decades building a reputation as one of the best places in Britain to grow old.

From the Dorset coast to rural Devon and Cornwall, it is a region where people come to retire, where families have held on to homes for decades and where farms and businesses are often passed from one generation to the next.

But that demographic story is starting to create a financial one.

The South West has the oldest population of any English region. At the last Census, 22.3% of people living here were aged 65 or over, compared with 18.4% across England. In East Devon, the ageing of the population is even more pronounced: the area had the highest proportion of people aged 90 or over anywhere in England and Wales.

Behind those numbers sits an enormous amount of accumulated wealth. Homes bought decades ago have risen substantially in value, pensions have grown and thousands of family businesses and farms have been built up over a lifetime.

Over the coming years, more of that wealth will inevitably start moving between generations. The question is whether transferring it will be quite as easy as families expect.

The South West is old, but it is also asset-rich

A £300,000 home hardly sounds unusual in the South West anymore.

The average property in the region was worth £304,562 in June, according to the latest UK House Price Index, around £11,000 more than the average across England. Prices have risen another 1.9% in the past year.

In some parts of the region, the numbers climb much higher. A detached home in Bristol now costs an average of £696,000, while a semi-detached property is £452,000.

Even more telling is what is happening among cash buyers. The average South West home bought without a mortgage in June was worth £306,763.

For families looking at what their parents or grandparents own, the sums can therefore become large surprisingly quickly. A mortgage-free home, some savings and a decent pension can create an estate worth hundreds of thousands of pounds without its owner ever having considered themselves especially wealthy.

And that distinction matters.

A house worth £500,000 might make someone wealthy on paper. It does not put £500,000 in their bank account, nor does it give their executors immediate access to that money after they die.

It is that gap between wealth and available cash that could become increasingly important as the South West’s population ages.

Inheritance tax receipts are already hitting records

There are signs nationally that more money is beginning to flow through the inheritance tax system.

HMRC collected £3.2 billion in inheritance tax between April and July this year, £100 million more than during the same four months in 2025.

June’s inheritance tax receipts were the highest ever recorded.

HMRC points to a combination of rising asset values, a greater volume of wealth transfers following deaths and the decision to keep inheritance tax thresholds frozen.

The basic nil-rate band remains £325,000 and the residence nil-rate band £175,000, with the thresholds now due to stay at their current levels until April 2031.

That does not mean every family with a £500,000 house suddenly faces an inheritance tax bill. There are exemptions and allowances, including transfers between spouses and civil partners, and most estates still do not pay inheritance tax.

But it does mean that as the value of property, pensions and other assets grows while thresholds remain fixed, more families may find themselves having to understand a tax that they once assumed was only an issue for the very wealthy.

And in the South West, there is another complication.

Farms and family businesses face a different inheritance landscape

Drive far beyond Bristol, Bournemouth or Exeter and much of the wealth in the South West does not sit in conventional investments at all. It sits in land, livestock, buildings and businesses.

Agriculture remains a major part of the regional economy.

The South West has around 1.72 million hectares of farmed land and an agricultural workforce of more than 62,000 people – 22% of England’s entire agricultural labour force. Around a third of England’s cattle and almost two-fifths of its dairy herd are found here.

Many of those farms are not vast estates. The average farm in the South West covers 68 hectares, compared with 87 hectares across England, and almost half of the region’s agricultural holdings are grazing livestock farms.

That makes changes introduced this April to agricultural and business property relief especially relevant locally. Since 6 April, the first £2.5 million of qualifying agricultural and business property can receive 100% relief from inheritance tax. Above that, qualifying assets generally receive 50% relief, creating an effective inheritance tax rate of up to 20% on the excess.

Unused allowance can be transferred between spouses and civil partners, potentially giving a couple a combined £5 million allowance for qualifying agricultural and business assets.

For many farms and businesses, there will still be no inheritance tax to pay.

For those that are affected, however, there is an obvious practical problem: the value of a farm or family company can be considerable without the family having an equivalent amount sitting in cash.

The Government has extended the option to pay inheritance tax on qualifying agricultural and business property over ten annual interest-free instalments, which should ease some of that pressure.

Even so, succession is becoming a more pressing conversation for some South West families who may previously have assumed that a farm or business could pass relatively untouched from one generation to the next.

Pensions are next

Another major change is now less than a year away.

From 6 April 2027, most unused pension funds and pension death benefits will be brought into a person’s estate when calculating inheritance tax. The change is already law, having been legislated for in the Finance Act 2026.

For years, pensions have occupied an unusual place in estate planning. While somebody’s home, savings and investments would normally be considered when calculating inheritance tax, many unused pension pots could sit outside the estate. That distinction is about to narrow.

HMRC estimates that around 213,000 estates will contain inheritable pension wealth in 2027/28. Of those, around 10,500 are expected to become liable for inheritance tax when they would not have been previously, while another 38,500 are expected to pay more tax than they would under today’s rules.

For estates affected, HMRC estimates the average inheritance tax bill could rise by around £34,000, although it stresses that these projections do not account for people changing their financial planning in response to the new rules.

That could be especially important in a region with so many older residents.

A retired homeowner with a valuable mortgage-free property and a sizeable pension pot may have arranged their finances on the basis of rules that will soon no longer apply in the same way.

For their children, the final estate could look considerably different from the one the family had expected.

Could wealth get stuck between generations?

None of this means the South West is heading for an inheritance crisis. What it could create, however, is a bottleneck.

Inheritance is often talked about as though money passes neatly from one bank account to another. The reality can be much messier.

An estate might contain a £600,000 house, a pension, shares in a family company and some savings. On paper, there is plenty of wealth.

In practice, the house may need to be sold, a business valued, pension information obtained and inheritance tax calculated before the estate can be fully distributed.

Steve Gauke, Managing Director of estate finance provider Provira, says this difference between the value of an estate and the cash actually available to it is often overlooked.

“There is a tendency to look at the headline value of an estate and assume that means there is plenty of money available. Quite often, that isn’t the case at all.

“You can have somebody who has lived in the same South West home for 30 or 40 years, owns it outright and has built up a good pension, but only has a relatively modest amount of cash in the bank. Their estate can be worth a considerable amount without being particularly liquid.

“That matters because death creates costs and, in some cases, tax liabilities before all of those assets can be accessed or sold. With the changes we’re now seeing around pensions, farms and businesses, I think more families are going to have to think about how an estate actually works in practice, rather than just what it’s worth.”

The pension changes themselves recognise that cash flow can be an issue.

From next April, personal representatives will be responsible for reporting and paying inheritance tax due on unused pension funds. Where they reasonably expect tax to be due, they will be able to ask pension providers to withhold 50% of taxable benefits for up to 15 months and, in certain circumstances, pay the tax directly to HMRC.

During consultation on the changes, the Government acknowledged that a small number of estates could otherwise find themselves without enough liquid cash elsewhere in the estate to pay the tax attributable to the pension.

For Gauke, that is why conversations around inheritance may need to start earlier.

“The worst time to discover that an estate has a liquidity problem is when the family is already trying to administer it.

“For people with property, pensions, businesses or agricultural assets, it is worth understanding now what would actually happen on death. Who would deal with the estate? What tax might be due? Where would the money come from to pay it? And how long might it take before the major assets could be accessed?

“It doesn’t mean everybody needs to rearrange their finances. It means families should know what they’re dealing with.”

The South West’s next big wealth story may not be about earning it

For much of the past two decades, the financial story of the South West has centred on the cost of acquiring assets.House prices rose. Younger buyers struggled to get onto the ladder. Farms became more valuable. Business owners built companies and older workers accumulated pension pots.

The next chapter may be about what happens to all of it.

With more than one in five South West residents already aged 65 or over, a large transfer of property, pension and business wealth between generations is unavoidable over the decades ahead.

At the same time, the rules governing that transfer are shifting.

Agricultural and business property relief has already changed. Pensions follow next April. Inheritance tax thresholds remain frozen while asset values continue to move.

For many families, inheritance will still be uneventful from a tax perspective. But for others, particularly those whose wealth is tied up in a home, farm or family business, the challenge may be less about how much they inherit and more about how easily that wealth can actually move from one generation to the next.

In a region older than any other in England, that is a question likely to become harder to ignore.