Recent Trends in the Size and the Distribution of Inherited Wealth in the UK

Abstract

This document is the author's final accepted version of the journal article. There may be differences between this version and the published version. You are advised to consult the publisher's version if you wish to cite from it. Recent trends in the size and the distribution of inherited wealth in the UKDecember 2013 AbstractIn this paper we use HMRC estate statistics and micro-data from four UK household surveys to examine changes in the size, the composition and the distribution of inherited wealth in the UK over the period 1985-2010. Our findings indicate that the period under examination is characterised by a substantial increase in the flow of inheritance. This increase, which was particularly marked in the early 2000s, was mainly driven by the rise in house prices and to a lesser extent by the increase in the proportion of inheritances which included housing assets. The distribution of inheritance amongst recipients became more unequal over this period. However, the inequality-increasing effect from the greater dispersion in the distribution of inheritance was counterbalanced by the increase in the percentage of the population who received an inheritance, resulting in a small decrease in the inequality of inheritance for the population overall. Analysis of the distribution of inheritance by socio-economic status suggests a positive association between inheritance and socio-economic status with some suggestive evidence that this association might have strengthened over time. Overall, however, the value of inheritance for most people is rather small and the differences across groups rather moderate.

The Revival of Private Landlords in Britain’s Post-Homeownership Society

“…Essentially, as the first generation to experience mass homeownership has begun to die-off, their middle-aged children have inherited more housing property wealth. Indeed, since the early-2000s the inheritance of housing assets has accelerated further and also contributed to a greater distribution of inheritance across the population (Karagiannaki 2015). Traditionally, legatees have tended to sell housing property in order to distribute the proceeds (Hamnett 1991).…”

Lifetime Receipt of Inheritances and the Distribution of Wealth in England

“…Klevmarken () used data from the Swedish Household Panel Survey and also found an equalising effect of inheritances and gifts on the distribution of current net wealth. For the UK, the most comprehensive analyses of patterns of inheritance are those of Karagiannaki ( and ), summarised in Karagiannaki and Hills (). These authors also find that inheritances and gifts have not increased the inequality of current wealth, but this finding is based on the flow of transfers observed over a particular nine‐year period (1996–2004, using data from the British Household Panel Survey), and so we may be concerned that these data do not provide a representative picture of the relationship between wealth transfers and non‐transfer wealth for any particular cohort.…”

Wealth effects on job preferences

“…Does this imply that few workers' job preferences are subject to wealth effects? Comparing several British data sources, Karagiannaki (2015) shows that around 10% of inheritances are valued at 100,000 pounds or more, with 43% of the British population inheriting at some point over the lifecycle. Different data sources concord in showing an increasing number especially of large inheritances, indicating that more individuals will be affected in the future.…”