Research from Old Mutual Wealth has revealed adviser support for inheritance tax reform, with 44 per cent of advisers in favour of lifting the threshold to £1m.
Inheritance tax is currently charged at 40 per cent of the value of the estate above the £325,000 nil rate band and many expected an overhaul in the Autumn Statement, but the only change was an exemption for aid workers killed overseas.
Of the 836 advisers surveyed in mid-November, only 13 per cent indicated they did not support reform, while 11.5 per cent were in favour of abolishing inheritance tax altogether and 28 per cent called for the exclusion of the primary home.
Rachael Griffin, head of technical marketing at Old Mutual Wealth, said inheritance tax could be a key battleground approaching the next general election and the Conservative party is likely to consider reform.
“The problem with IHT is that many individuals caught under the current £325,000 threshold will feel they are leaving a relatively modest inheritance to their family and yet it will be subject to a tax which is ostensibly supposed to target wealthier individuals.
“Exempting the primary home from IHT also received some support. However, this would have the knock-on effect of encouraging individuals to store wealth in their home for tax planning purposes; this may not be seen as a viable option considering the potential for loss of stamp-duty revenue.”
Asked if the government crackdown on avoidance had impacted client attitudes toward legitimate tax planning, 12.9 per cent of advisers said some clients had shown reluctance towards this.
Other questions asked revealed that 73.2 per cent of advisers indicated they expect further legislative changes to the pensions system in the next parliament.
Around 53.9 per cent of those surveyed said they viewed defined benefit to defined contribution scheme transfers as an advice opportunity.
The firm’s retirement planning manager Adrian Walker commented that in order to develop appropriate and appealing proposition which match consumer’s needs, the industry needs a period of certainty.
“Equally, customers will appreciate certainty around the rules governing how they can withdraw their pension.”
In terms of protection, advisers were broadly supportive of the introduction of simplified products, with 79.4 per cent indicating they saw a place in the market for them. Of these, 44.7 per cent said they would help close the advice gap, while 51.7 per cent believe they might help.
Ian Jefferies, head of protection at OM Wealth, stated that while simplified protection is a bold solution to a serious problem, it is important that simplicity does not come at the expense of quality.
“The 2013 Sergeant Review of Simple Products illustrated that some simplified products run the risk of offering poorer quality cover by excluding certain benefits. Simplified products should be those which make it easier for customers and advisers to purchase cover without compromising quality.”