For professional advisers and paraplanners only. Not to be relied upon by retail clients.
The inheritance tax net is widening and growing your estate planning business is a key opportunity.
By Jess Franks, Head of Investment Products at Octopus Investments
Picture a client named Clara. She’s in her mid-seventies.
Clara is a widow and she’s lived in the same house for most of her life. She’s reached out to you to discuss her estate.
Inheritance tax wasn’t something she’d ever thought would affect her. But almost inconceivably, her home is now worth many multiples of what she and her late husband paid for it.
And while her assets have soared to ever higher values, the allowances available for an estate haven’t budged in that time.
The nil rate band has been frozen at £325,000 since 2009. The residence nil rate band is set at £175,000. Neither is likely to increase any time soon against a backdrop of high inflation.
So, unsurprisingly, Clara’s estate now faces an inheritance tax liability.
She doesn’t know what her options are, or even where to start.
And here’s the thing – Clara isn’t alone.
The widening inheritance tax net
Inheritance tax receipts have been growing at a remarkable rate, by almost £1 billion a year.[1]
This means more families will be dragged into the net, and those families already affected can expect more significant liabilities to plan for.
We also need to consider the broader picture of inheritance tax. This is an area families find complex and often lack a good understanding in. There are plenty of myths that persist. It’s not uncommon for clients to assume the only way to plan for inheritance tax is to make gifts, or for clients to believe you can gift the family home and continue to live in it and escape inheritance tax.
There is an urgent need that financial advisers can address here and help families pass wealth to the next generation.
In doing so, you can also unlock a growth opportunity for your business.
Growing through estate planning
To make the most of the growth opportunity, and to deliver good outcomes for clients, tune in to Growing through estate planning on 26 July at 10am.
This webinar will cover the inheritance tax landscape and why it deserves attention now.
Special guest, Dave Seagar of SIFA, will talk through how advisers can build and maintain professional connections when it comes to estate planning.
Also joining is a panel of financial advisers to discuss how they approach estate planning, the challenges they have faced, and how they have overcome them.
Key risks
- The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.
- Tax treatment depends on individual circumstances and could change in the future.
- Tax relief depends on portfolio companies maintaining their qualifying status.
- The shares of unquoted and AIM-listed companies could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
Our investments are not suitable for everyone. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs. This communication does not constitute advice on investments, legal matters, taxation or any other matters. Investors should read the product brochure before deciding to invest; this can be found at octopusinvestments.com. Personal opinions may change and should not be seen as advice or recommendation. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: June 2023. CAM013134.
[1] Source: HM Revenue & Customs, April 2023
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