Article by Phil
Concerns about inheritance tax planning are now the number one concern for clients over 55.
That’s according to research by Next Wealth published in the FT Adviser (2/3/26). This is a new concern on the back of the chancellor’s tax raid on inheritance tax (IHT) in last year’s budget. It wasn’t even on the radar in last year’s report.
Not surprising since the Institute of Economic Affairs believes that the UK has the fifth highest IHT burden in the world. According to You Gov 54% of people would now like to see IHT abolished altogether. Is that possible? Maybe as it only contributes £7 billion out of over £860 billion collected by the treasury.
Almost 50% of Inheritance tax planning advisors say this is their client’s number one concern. Follwed by worries about running about of money. Traditionally the biggest concern.
Over 55’s also worry about the cost of living, especially with inflation higher than it should be. The next biggest concern is about care costs and how clients can mitigate their costs.
Budget hit confidence
The autumn budget didn’t help on the investment confidence front either. Less than 10% of people said that they felt more confident after the budget, according to Continuum. Perhaps Racel Reeves has a very big family! Even a quarter of Labour voters said they felt less confident.
Overall, 30% of investors said that the budget had made them less confident about their investments.
Not enough people have done any Inheritance tax planning.
Despite IHT now being the number one concern, many people still haven’t done anything, or enough about it. RBC Brewer Dolphin recently published their Legacy Planning Report “From Paperwork to Purpose”, they found that:
- 22% of beneficiaries had been told about the inheritance tax planning around the legacy they would receive.
- But 45% had only been told something about it, and
- 33% didn’t know anything about their inheritance.
- When it came to Wills, 83% had made a Will, but
- 57% had not named an executor for their Will.
The survey was based on advised clients with over £250,000 in assets.
It’s not uncommon for executors to be left blank. Often families aren’t sure who would be best placed to deal with the estate. Quite often we as financial advisors end up as the executors. This makes sense because we already have all the details of the family’s finances. Plus, our charges are normally way lower than a solicitor’s hourly rate. Which are also plus VAT of course.
Gifting on the rise
Those who are actively pursuing Inheritance Tax planning are facing more difficult choices now that pensions will become part of the estate from 2027. One measure which is beginning to become more popular, according to the FT Adviser (6/3/25) is gifting. Whilst IHT is payable on gifts if the donor dies within 7 years, there is a £3,000 a year tax free exemption. Some grandparents are using these allowances to pay off student debts for example.
Tax rules also a concern.
It’s not just Inheritance tax planning, which is a concern, 53% of people with an adviser are concerned about taxation in general. 47% say they are confused about the tax rules, especially around pension tax. 27% said that they were worried they had made the wrong decision when it came to paying tax and 75% said that they regretted doing something the tax year before.
Worries about leaving it too late to make changes, missing out on allowances and having too much cash rather than investments were the biggest concerns. According to Ad Lucem.
Tax investigations on the up
The number of investigations into IHT has already risen by over a third year on year. But many expect this number to increase. In 2027 IHT on pensions come into force, along with changes to various business reliefs.
At the same time personal representatives (PR’s) become responsible for any wrongly calculated IHT. Given that many of these PR’s will no longer be professionals, like advisors or accountants, more mistakes are expected in the IHT calculations. Despite this the treasury has refused requests to extend the deadline for the payment of IHT beyond 6 months. That means that estates will then be liable for penalty interest at a whopping 4% over base. Another good reason to use a professional representative like us to help with your probate.
Get more information.
If you have concerns about inheritance tax planning, then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
