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Fewer than four in 10 (37%) aware of rules for passing on wealth when you die

10/04/2019

According to research by the Big Window for Quilter, the wealth manager, just 37% of people are aware of the regulations around passing on wealth to family at death, despite the Treasury collecting a record £5.2billion in inheritance tax (IHT) last year.

The Treasury’s record year was attributed to high house prices pushing more people over the threshold when people need to pay inheritance tax. On the 6th April the government, as scheduled, is increasing its residence nil-rate-band (RNRB) to £150,000, which gives people an additional threshold before IHT becomes due on their estate.

However, the research shows that despite the RNRB being in effect since 2017, just 41% of people are aware of this complicated part of the inheritance tax landscape. Further to this, under half of respondents were aware of other fundamental inheritance tax rules such as the £3,000 gifting limit (46%) or the £325,000 nil-rate-band (43%).

Half of the respondents that took part in the research by The Big Window were asked whether they thought regulations would affect the decisions they make about passing on wealth. Despite many people being unsure how the regulations work, 60% of these respondents felt that these regulations will affect these types of decisions.  This illustrates that while many people recognise that the regulations are important and want to factor them into a financial plan, most struggle to understand how they work in practice.

The Office for Tax Simplification (OTS) published the first in its series of reports exploring how inheritance tax can be simplified at the end of last year. This report identified numerous areas of confusion and complexity around IHT, but the recommendations focused primarily on the administrative burden. The second report which is currently being produced should make recommendations about how to simplify the system more broadly.

Rachael Griffin, tax and financial planning expert at Quilter says:

Rachael Griffin“In the modern world families are increasingly becoming more complex and we need a tax regime which functions with this in mind. The RNRB is a prime example of an over-complicated tax policy which no longer reflects a modern family set-up, as it depends on a number of factors, including your marital status and who inherits the family home. These kinds of rules should be rethought so people have the freedom to gift to whoever they want and are not constrained by antiquated societal rules.

“A simpler method to achieve the same goal would be to simply raise the standard nil rate band amount to £1m per couple. A simple IHT regime gives people far great opportunity to best plan their estates and make the most difference to later generations.”

David Miller, Investment Director at Quilter Cheviot, adds:

“As investment managers, we know the importance of working with financial planning experts to ensure our clients understand the complexities surrounding inheritance tax. Forward planning can make a huge difference to the following generations, and this is something that people should consider sooner rather than later.”

 

* The research sample of 1,270 UK adults was a mix of ages and ABC1C2 social grades, half with higher asset levels and half with lower

For more information contact

Alex Berry023 8072 626007741 151931alex.berry@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 £118.4 billion in investments (as at 30 June 2019).

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: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

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

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

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.