The increase in IHT receipts exposed

Earlier this month you may have seen that Transact featured in the lead article in the Sunday Times Money Section over the Easter weekend. The article entitled ‘Countdown to the inheritance tax raid coming for the middle-class’ covers the impact that the changes in inheritance tax (IHT) and the inclusion of unused pension pots will have – significantly expanding the tax base and increasing the number of estates potentially exposed to the 40% IHT charge.

The findings around household awareness of pension tax changes, and who could be liable for inheritance tax are referenced, and our Chief Development Officer, Andrew Cullen-Jones is quoted:

“Including pensions in estates brings a generational increase in households potentially liable to inheritance tax, as most household wealth is held within property and pensions. Seeking advice and planning early are going to be key to helping households navigate this change.”

Our IHT Index, built in conjunction with Trajectory, estimates as many as 20 per cent of households in the UK could be liable for inheritance tax after pensions are included in estates. The analysis is based on the latest Wealth and Assets Survey, last published for the years 2020-2022, which found that levying inheritance tax on pensions “fundamentally altered the landscape for middle Britain”. Given that only 9% of adults are estimated to be in receipt of financial advice, there is an opportunity for advisers to help a new population of clients who will undoubtedly need help with their intergenerational financial plans.

There are therefore opportunities to market to new clients and you can discuss your advice approach to clients with our technical team. We also have a wealth of information hosted in our technical centre and via the Transact Podcast on Apple and Spotify.

You can find out more about the Transact IHT Index by reading white papers hosted here.

All information is based on our understanding and interpretation of applicable law and regulation which is subject to change. Tax treatment depends on individual client circumstances and may change in the future.