"IHT planning is growing in prominence as part of advisers’ workload and as part of their client base, as more clients focus on tax efficiency"
- Mark Dunn - Downing
Rising demand for advice is fuelling the number of advisers looking for support on Inheritance Tax (IHT) planning, new research from Downing shows.
A new survey of UK financial advisers and wealth managers from the investment manager revealed that 51% say they would value more support from providers of specialist IHT planning solutions, while 93% say their firm works with lawyers or accountants for additional expertise.
IHT raised £7.5bn in the 2023/24 tax year compared with £7.1bn in the previous year, and receipts are forecast to rise further. With the recent Budget changes, further increases in the number of estates affected by IHT are also expected
The Chancellor continued the freeze on IHT thresholds at £325,000 plus £175,00 if a home forms part of the estate until 2030 and included pensions as part of an estate, subject to consultation. The Chancellor also changed the potential tax relief available on Business Relief qualifying assets: currently, all Business Relief assets benefit from 100% IHT relief.
After April 2026, unlisted Business Relief assets and Agricultural Relief assets will benefit from a £1,000,00 allowance, where the assets will continue to benefit from 100% IHT relief. Thereafter, the tax relief will be reduced to 50% (an effective IHT rate of 20%). AIM-listed shares will not have the £1,000,000 allowance.
Downing’s research shows that around 42% of advisers already receive support from specialist IHT providers, and 50% work with both accountants and lawyers to source additional expertise.
Around 40% work just with accountants, while 3% work solely with lawyers and a further 6% plan to work with accountants or lawyers in the future.
81% of advisers questioned employ specialists who only advise on IHT planning, and 52% believe their firm is very experienced in IHT planning solutions.
However, 45% describe themselves as only quite experienced, while 3% admit they are not very experienced.
Advisers believe clients are generally knowledgeable about IHT planning solutions – 43% say their clients are well-informed, while 49% describe them as quite well-informed.
Mark Dunn, Head of Retail Sales, at Downing says: “IHT planning is growing in prominence as part of advisers’ workload and as part of their client base, as more clients focus on tax efficiency.
"That is highlighted by how many firms employ specialists who only focus on IHT planning and the growing business relationships with lawyers and accountants to source further expertise.
"It also explains the demand from advisers for more support from providers of specialist IHT planning solutions. Providers need to work harder to ensure advisers receive the help they need.”
