Inheritance Tax  

Advisers predict boom in inheritance tax advice demand

Advisers predict boom in inheritance tax advice demand

Financial advisers are forecasting a boom in demand for inheritance tax advice and are looking to work with lawyers to cope, according to research from Prudential.

The study found that about seven out of 10 (69 per cent) advisers expect demand from clients for advice on inheritance tax planning to grow over the next year with 37 per cent forecasting a significant increase.

But 17 per cent of advisers admit that, due to regulatory changes, they are not sufficiently confident in advising on inheritance tax issues and want to develop links with legal firms and other specialists.

About 35 per cent of advisers said they were considering strengthening links with lawyers while 22 per cent say they are already working with legal firms.

Paul Harrison, head of business consultancy at Prudential, said: “Rising property and pension wealth are making it increasingly important for advisers to be able to help clients with specialist advice on inheritance tax planning and demand for advice is booming.

“However, providing that advice is becoming more complex with changes to pension rules as well as inheritance tax limits, and advisers are absolutely correct to work with other specialists to ensure that clients are receiving the best possible support.”

Advisers say clients with final salary schemes who are seeking to take advantage of the flexibility of pension freedoms are a major source of IHT advice enquiries.

More than three-quarters (77 per cent) of advisers have seen a rise in clients with final salary schemes asking about IHT planning with 59 per cent reporting significant increases.

But nearly 60 per cent of advisers say part of the increase in demand is being driven by new IHT rules that came into effect in April 2017.

These rules include a £100,000 per person residence nil-rate band which will increase each year and complements the standard nil rate band to provide a potential £1m IHT allowance for a couple in 2020/21.

Figures published by HM Treasury earlier this month showed inheritance tax receipts will reach £6.2bn in 2022, despite chancellor Philip Hammond’s pledge not to introduce a “death tax”.

This is an increase of more than 30 per cent on inheritance tax receipts in 2016 to 2017.

Trystan Lewis, a chartered financial planner with Griffin Wealth Management, said his firm was experiencing more demand for IHT planning.

He said: “More and more people are finding they have an inheritance tax liability as asset prices have risen dramatically in the last few years.

“Reviewing the client’s circumstances with specialist lawyers is the sensible option.

“Some of the new legislation around the residential nil rate band can be quite complicated.”

Prudential's research was conducted in February 2017 among 104 financial advisers.