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Survey finds IHT conversations falling through the cracks

14 November 2018

As inheritance tax receipts continue to climb, advice firms must address the issue of estate planning, according to a new report by Octopus Investments.

In its annual Cicero Inheritance Tax and Estate Planning report, which analysed views among UK advisers and consumers over age 55, advisers admitted that 28% of their clients should have considered IHT and estate planning but haven’t as yet.

This is while HMRC IHT receipts totalled £5.2bn in 2017-18, an increase of 8% compared to 2016-17, the Octopus report says.

Half of clients aged 55 and over the IHT threshold said they still haven’t had a discussion with their adviser about inheritance tax, despite a desire to broach the subject, and a third of advisers (35%) said it was the client who initiated the conversation.

But despite these figures, inheritance planning makes up for nearly one in five of all firms’ revenues, up from 14% in 2017, and advisers are increasingly acknowledging that inheritance tax will form an important part of their advice proposition – 76% up from 63% the previous year.

Paul Latham, managing director, Octopus Investments, said: “With rising numbers of people being subject to inheritance tax, particularly in areas where property prices have risen sharply, it’s fundamental for people to consider estate planning. The research shows that while inheritance tax planning is on the rise, more conversations need to be had to ensure people can pass on as much of their wealth to the next generation as possible.”

For those advisers addressing estate planning, the report showed that the majority (58%) considered Business Property Relief investments as an appropriate solution for clients willing to take on more risk while minimising IHT exposure. Nearly three quarters (73%) of advisers surveyed expected to recommend more BPR qualifying investments over the next 12 months.

Survey conducted amongst 100 financial advisers and 500 consumers, representative of the market. 

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