Inheritance Tax / Estate Planning

Inheritance wealth to double in two decades

Property and pension wealth increases mean that inheritance wealth looks set to double in the UK over the next 20 years. Steve Wright, our Estates Director, explores the trend and what it means for your tax and Estate planning.

With the news that Inheritance Tax revenues have risen to record levels, new research has brought the subject of inherited wealth into sharp focus. Driven by rising property prices, pension wealth and effective tax planning strategies, the value of inherited wealth is predicted to grow by 100% over the next 20 years.

Astonishingly, those born after 1980 are set to inherit between £200,000 to £400,000 on average. The typical age at which people will receive that significant inheritance payment is 61, although it’s likely that many people will be given sizeable amounts earlier in their lives through early gifting. As a result, this group, the children of ‘baby boomer’ parents, will perhaps enjoy being able to get on the property ladder earlier, as a result of this significant wealth being passed down.

As a tax-efficient strategy, gifting is certainly becoming a more popular option with the level of gifts growing from £9.2 billion in 2007 to £12 billion in 2017 according to the ONS. With an awareness that Inheritance Tax is the most punitive tactic in the UK tax authority’s arsenal, many people are keen to make use of gifting allowances, and avoid any unnecessary tax.

If you are considering gifting it can be useful to explore your options with an expert and ensure that any decision you make is within your means and tax-efficient. Some of the ways in which our clients have shared their wealth include providing a lump sum gift for a house deposit, or regular gifts from excess income.

To discuss any aspect of Estate planning please contact your nearest office.