A staggering 69% of people aged 50 responding to a recent survey conducted on behalf of Visible Capital, said they have not taken specific inheritance tax (IHT) advice despite many holding assets that would take them above the nil rate band.
Yet, at the same time, 64% said they planned to leave inheritance to their children or grandchildren, with 81% having made a Will.
The average wealth which the group said they intended to leave to their beneficiaries, ranged from £100,000 to £1 million.
Ross Laurie, CEO Visible Capital, comments: “We were shocked when we saw the results of the survey. For 69% of this age group, with the bulk of the respondents aged 60 to 80, not to have sought advice on inheritance tax, could have a devastating impact on their estates.
“With around a third of respondents expecting to leave estates in excess of the nil rate band, which has been frozen until 2026, another five years, this lack of forward planning around IHT is needlessly lining them up to pay money into Treasury coffers.
“Simply writing a Will is not enough to prevent overpayment of tax on someone’s lifetime of hard-earned wealth.
“My fear is that they won’t be passing on as much wealth to their family as they imagine.”
A large proportion of the survey group were women, suggesting gender gap issues which have been raised of late around pensions and savings, are present also in financial planning for the future.
Talking about the survey respondents who said they had planned for IHT, Laurie says: “It is perhaps not a coincidence that around 33% of overall respondents said they used the services of an IFA. It is to be hoped it is the access and advice from their IFA which has helped in respect of IHT planning.”
There are clear opportunities for IFAs who undertake holistic financial planning to address this type of DIY investor with their tax planning services, says Laurie. “I suggest that this is a statistic that they should write on a post-it note and stick on their computer screens.
“Financial planners who can onboard clients with as much detail as possible, including full access to the client’s income and expenditure, savings and investments and retirement assets, can both deliver a more refined and effective plan and a more compliant one. Automating the onboarding process can make it an easier win for the adviser/ and a better experience for the client too.”