Advisers report a surge in IHT enquiries ahead of the Budget

Advisers are experiencing a surge in enquiries about Inheritance Tax (IHT) planning ahead of this year’s Budget as demand for support on estate planning continues to expand, new research from investment manager Downing shows. 

In Downing’s survey of UK financial advisers and wealth managers, 92% say they are seeing a rise in enquiries about IHT in the run-up to the Budget on 26 November, including 12% who are reporting a substantial increase. 

IHT raised a record £8.25 billion for the government in the last financial year. The Office for Budget Responsibility estimates IHT receipts will rise to another record of £9.1 billion this financial year and hit £14.3 billion by the 29/30 tax year. 

Around two out of five (38%) of advisers say the increase in enquiries is mainly being driven by new clients, with 27% saying the increase is coming mainly from existing clients, and 35% saying it is a mix of new and existing clients. 

Positively, enquiries are translating into business – 80% of those questioned say the proportion of their business accounted for by IHT has risen in the past year, with 13% saying it has increased substantially. Those questioned expect it to continue to expand, with more than four out of five (81%) saying IHT planning and advice will make up 20% or more of their business in three years. 

They expect the proportion of clients with a potential IHT liability to continue to grow too – currently more than four out of five (83%) estimate that up to 30% of their clients have an IHT liability, with (17%) estimating 30% to 40% have a potential IHT issue. 

Around 40% of advisers say their clients are well-informed in general about IHT planning solutions, while 50% say clients are quite well-informed, with 10% saying clients are neither well-informed nor uninformed. 

Mark Dunn, Head of Retail Sales at Downing says: “Growth in client enquiries about IHT planning solutions has increased materially since the last Budget introduced significant changes, and advisers and wealth managers are seeing a rapid rise in interest. We believe that Downing is well-positioned to support advisers and help them navigate this complex area. 

“It is understandable that enquiries are growing in the run-up to the 26 November, as more and more people are being caught within the IHT net due to frozen nil rate bands and the proposed pension reforms. 

“It is interesting to see how important IHT planning solutions and advice are to adviser businesses. This underlines the need for more solutions to meet the needs of clients, many of whom are now looking for growth in Business Relief investments.”  

Downing recently launched the Downing Growth Estate Planning Service, a service that complements Downing’s range of estate planning solutions. The new Service aims to provide IHT relief after two years, if held at the date of death, and targets returns of 5% to 7% p.a. The Service also provides Wealth Guard, built-in downside protection that is unique to Downing’s estate planning suite. Wealth Guard covers a fall in value of up to 20% of the net initial investment on exit following death, at no extra cost to investors. 

The Service offers higher-return potential within a BR-qualifying, asset-backed framework, managed by a seasoned investment team overseeing £1.2 billion across Downing’s estate planning services.