RegulationMar 20 2012

Survey reveals IFA inertia on inheritance tax plans

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ByEmma Ann Hughes

Octopus’ survey revealed inertia among advisers and providers when it comes to addressing inheritance tax liabilities.

According to survey results, more than two thirds of advisers expect the volume of discounted gift trusts business they write to remain flat or even deteriorate over the next year.

Paul Latham, managing director of Octopus, said this response was at odds with the characteristics of an ageing UK population and the increasing number of people with estates valued at more than the nil rate band of £325,000 for inheritance tax.

He said: “Our survey revealed a widespread perception within the adviser community that although DGTs have their uses, they come with too many drawbacks to make them must-have solutions for the majority of their clients.

“Many of the advisers we spoke to told us DGTs are too complicated to set up, take too long to fall outside of IHT and, most importantly, they are simply not flexible enough, tying up the client’s income when they’re likely to need it most.

“This last concern has been accentuated by current market conditions and a general nervousness around the UK’s economic environment”.

As well as identifying what advisers believe are the three main drawbacks to discounted gift trusts, the survey also highlighted the need for product providers to offer more innovative solutions to inheritance tax that directly addressed these concerns.

The survey cited a lack of competitive product development in this area, with 88 per cent of advisers having not changed their top three discounted gift trust providers in the last 12 months.