Share
Print
Print Share

Press comment: ONS figures on intergenerational transfers reveal need for IHT reform 

30/10/2018

Figures from the Office of National Statistics reveal trends in intergenerational transfers. Rachael Griffin, tax and financial planning expert at Quilter comments on how IHT policy, which encourages wealth to be transferred on death, needs a rethink. 

Rachael says:

Rachael GriffinThe great wealth transfer has been dominating headlines in recent years, particularly as debates of intergenerational inequality have reached fever pitch. The reliance on inheritance to improve the lives of those that receive it is revealed in the latest ONS figures which show Inheritances received by those in the lowest wealth quintile made up 44% of their net total wealth. However, the average age at which people can get assistance from their older loved ones is getting later and later as government policy encourages people to pass on wealth on death.

The figures from the ONS reveal anticipated trends, including the age that people can expect to inherit is edging into mid-60s, while those aged 25 to 34 are most likely to get gifts or loans from family, consistent with the rise of the bank of mum and dad as one of the prime lenders for first-time buyers.

In 2018 people are living longer and retired households are at historic highs in terms of the wealth they hold relative the working-age population. One way to ease the pressure on the younger generations is to allow wealth to filter down more easily.  The annual IHT gifting allowance is living in the past, having been frozen since 1981. Had the annual allowance tracked inflation, it would be permissible to gift £10,932.20 per tax year in 2017, according to the Bank of England inflation tracker.

The Office of Tax Simplification is expected to produce the first half of its finding on how to simplify inheritance tax imminently. Details were conspicuously absent from Hammond’s speech yesterday and given the government currently rakes in £5.2bn a year from inheritance tax it may be they aren’t keen to start an overhaul which will reduce their tax take given the budget give-aways.  However, a fundamental overhaul is what people want: research for Quilter* shows 63% of UK adults think IHT is an unfair tax and 14% don’t know. Given inherited money is money taxed twice, that feeling is understandable.

Sands may have begun to shift from tinkering with personal taxation to cracking down on global corporates, as Hammond announced a consultation on a digital services tax against global tech companies making large profits in the UK. This could be a welcome change of tack to use global corporates to boost coffers rather than double taxation of wealth.

 

*A national representative survey of over 2,000 UK adults

For more information contact

Kathleen Gallagher023 8072 629307990 004932kathleen.gallagher@quilter.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• The private client advisers business is now Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.