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, research from Downing has revealed.
In Downing’s survey of UK financial advisers and wealth managers, 92% said they saw a rise in enquiries about IHT in the run-up to the Budget on 26th November, including 12% who are reporting a substantial increase.
IHT raised a record £8.25bn for the Government in the last financial year.
The Office for Budget Responsibility (OBR) estimated that IHT receipts will rise to another record of £9.1bn this financial year and hit £14.3bn by the 29/30 tax year.
Around two out of five (38%) of advisers said the increase in enquiries is mainly being driven by new clients, with 27% said the increase is coming mainly from existing clients, and 35% said it is a mix of new and existing clients.
Positively, enquiries are translating into business – 80% of those questioned said the proportion of their business accounted for by IHT has risen in the past year, with 13% said it has increased substantially.
Those questioned expected 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 said they expect the proportion of clients with a potential IHT liability to continue to grow too – more than four out of five (83%) estimated 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 said their clients are well-informed in general about IHT planning solutions, while 50% said clients are quite well-informed.
10% said their clients are neither well-informed nor uninformed.
Mark Dunn, head of retail sales at Downing, said: “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.”
