Savers are expecting to see a rise in inheritance tax (IHT) rates as a way to offset the government’s coronavirus support measures, according to research from Savings Champion.
A survey of 1,000 savers by the research firm found more than half believed it was “somewhat likely” that IHT rates will rise, while almost 30 per cent thought it was “highly likely”.
Additionally, the firm found that the majority (70 per cent) of respondents understood the importance of inheritance tax planning, and 31 per cent believed it was more important than before lockdown.
Meanwhile a quarter of people reported they were now more comfortable about discussing their finances after death than they had been before the pandemic and 13 per cent had already started such discussions due to the pandemic.
Figures from the Office for National Statistics published this month (July 21) showed public sector borrowing in the first quarter of this financial year was estimated to have been £127.9bn - £103.9bn more than in the same period last year - and the highest borrowing in any April to June period since records began in 1993.
However, Zena Hanks, partner in the private wealth team at Saffery Champness, said: “The reality is that relatively few estates actually pay inheritance tax and, while the income is undoubtedly important for the Treasury, it doesn’t actually generate that much revenue compared to other taxes.
“The lack of tangible action, so far, following the Office of Tax Simplification’s review [last year into simplifying IHT] indicates what many expected all along – that IHT reform would take considerable effort for comparatively little return at a time when HMRC is under pressure to demonstrate value for money from its activities.”
Despite this, Ms Hanks added: “We have seen various signs from the government recently that major tax changes could be on the horizon, such as the chancellor’s request that the Office of Tax Simplification review the capital gains tax regime, and the Treasury Committee’s newly-launched ‘Tax after Coronavirus’ inquiry, so it seems the government may be casting the net wide in its search for possible means of paying off the country’s debt”.
Savings Champion also surveyed savers around the take-up of wills and found the majority (almost 90 per cent) of respondents had already made one, with 90 per cent having done so over a year ago, before the coronavirus.
However, it also found that many respondents waited until they were older to get a will. Over 30 per cent said they had made their will between the ages of 55 and 64, while 28 per cent said they waited until they were between the ages of 65 and 74 before writing one.
Eleanor Evans, partner and head of trusts and estate administration at Hugh James, said: “It is certainly our experience that, traditionally, a significant proportion of our clients who write wills are in the demographic described, i.e. retired or approaching retirement.
“Based on our discussions with our clients, the reasons for this are numerous and perhaps understandable, and include discomfort in confronting their own mortality, meaning it always gets pushed to the bottom of the ‘to do’ list, and not considering that a will is needed when younger, feeling their assets do not justify or necessitate it.