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UK adults not seeking out advice or information available to them when making wealth transfer plans

The majority of UK adults do not seek financial advice on how they transfer wealth to the next generation, at a time when HMRC figures are showing the government’s tax take on inheritance is at £5.2 billion.

According to research by The Big Window for Quilter, nearly two-thirds (63%)* of UK adults have not sought any information or professional advice on the transfer of wealth to their next of kin, and only 15% said they had sought information or professional advice on both transferring their wealth whilst still living and also at death.

HMRC figures show that inheritance tax bills rose by 8% last year, however, over a third of respondents (35%) who have not sought this type of information or advice said this was something they hadn’t even considered before. A further 22% said they did not feel they needed the information and advice, whilst 20% said they did not have enough assets to justify paying for the advice.

The research also revealed that nearly three quarters (73%) of respondents do not have a wealth transfer or inheritance plan in place, while 40% have not discussed plans to pass on wealth to family members who will benefit. A similar proportion of respondents (41%) said they had discussed their plans, but not in great detail.

Pamela Reid, Client Services Director at Quilter Cheviot, said: “Inheriting is assumed to be completely normal, yet this research shows it is still something that isn’t openly discussed and in many cases isn’t being planned. It is never too early to start planning, and these findings should encourage financial advisers to open the discussions with their clients wherever possible; addressing common misconceptions and concerns and encouraging them to be as transparent with their next of kin earlier.”

Rachael Griffin, tax and financial planning expert at Quilter, adds: “The inheritance tax system has layers and layers of complication, which have created a Jenga tower on the verge of toppling over. The technical nuances mean you have to be heavily versed in rules of inheritance tax to know the best way to pass wealth on to the next generations. Currently, the Office of Tax Simplification are reviewing inheritance tax, which will hopefully recommend some ways to remove these complications. However, they’ve said that it won’t be an overhaul and so financial advice is and will continue to be, crucial to gain comfort and security in your financial plan. One simple change could be bringing allowances up to date. For instance, the annual IHT gifting allowance has remained at £3,000 since 1981. Had the annual allowance tracked inflation, it would’ve been permissible to gift £11,296 per tax year in 2018, according to the Bank of England inflation tracker.”

*The research sample was a mix of ages and ABC1C2 social grades, half with higher asset levels and half with lower.

Investors should remember that the value of investments, and the income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee of future results.

Any mention of a specific security should not be interpreted as a solicitation to buy or sell a specific security.

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