Nearly one in three over 70s homeowners haven’t thought about inheritance planning
29% of home owners over 70 haven’t thought about what happens to their home when they die with an additional 18% over 70s unaware their ISAs won’t escape inheritance tax charges.
The research undertaken by Opinium on behalf of Octopus Investments also revealed that just 14% of people are aware of the current inheritance tax threshold.
The survey of 2,004 people comes as government forecasts predict taxes receipts from IHT will increase from £3.8 billion last year up to £5.6 billion in 2020/21 despite the phasing in of the nil rate residence band, worth up to £175,000 per person.
Simon Rogerson, CEO of Octopus Investments, said: “Getting financial advice can make a real difference to people’s lives. Our latest research shows just how vital it is to be aware of the key rules and regulations around tax planning so you can make your money work harder for you and help look after those you love when you are gone.
“ISAs remain the go-to financial product for many people as they look to build up a nest egg in a tax efficient way during their lifetime. But with such a large number of older people investing into them, there is a worrying lack of awareness that ISAs are subject to a 40% inheritance tax charge. ISAs are a great tax efficient investment in your lifetime but more people need to be thinking about how to pass on their hard earned money to their loved ones when they die.”
Since 2013, when the Government announced shares listed on the Alternative Investment Market (AIM) could be held in ISAs, it has been possible to invest into an IHT free ISA by holding shares listed on AIM that qualify for Business Property Relief (BPR). Octopus Investments say shares that qualify for BPR fall outside of the scope of inheritance tax as long as the shares have been held for at least two years, and are still held at the time of death. This ISA option could be an interesting solution for older investors looking to reduce their inheritance tax bill while maintaining the lifetime tax benefits associated with an ISA, which they have built up during their life.
Simon Rogerson continued: “There are a range of options now available to investors and with this choice comes a growing need for more people to speak to a financial adviser. You can’t bury your head in the sand or adopt a one size fits all when it comes to financial planning for your future – we’ve all got our own unique set of circumstances that we need to take into account. Getting some advice can make a real difference and can help you to put money aside for your loved ones in the most tax-efficient way possible.”