Research from investment, protection and retirement specialist LV= highlights a significant awareness gap around investment bonds as part of inheritance tax (IHT) planning, particularly among those closest to retirement age.
LV’s Wealth and Wellbeing research* found that only 3% of UK adults aged 65 and over say they have a strong understanding of how bonds can be used for IHT planning. This is worth noting, given that some individuals in this age group may be closest to, or already in, retirement and beginning to consider estate planning decisions
Despite increasing pressure on estates, wider awareness remains low. Over two thirds (67%) of UK adults say they know little or nothing about the role investment bonds can play in IHT planning, while 22% have not encountered them in this context at all. Awareness is also uneven across demographics, with more than a quarter (27%) of women saying they are unfamiliar with bonds as an IHT planning solution.
The findings come at a time when inheritance planning is becoming more complex and more relevant for a growing number of clients. Frozen IHT thresholds, sustained asset growth and planned reforms, including the proposed inclusion of pensions within taxable estates from April 2027, are prompting advisers and clients to reassess traditional approaches.
Trust-based approaches, including investment bonds held within a loan trust, can provide a balance of control, flexibility and tax efficiency, supporting longer-term estate planning while allowing clients to retain access to their capital.
“Our research highlights a significant awareness gap around investment bonds at a time when inheritance planning is becoming more complex, particularly for those nearing or in retirement.
“As the tax landscape evolves, it’s important that advisers understand the technical role bonds can play within structures such as loan trusts, where future growth can fall outside the client’s estate for IHT purposes, alongside the ability to access tax-deferred withdrawals – offering a valuable combination of tax efficiency and planning flexibility.”
Gwen Haggo, LV= Savings and Retirement Sales Director
