Three in 10 (30%) ultra-high net worth individuals (UHNWIs) have put plans to pass money down to younger generations on hold, research from Mazars has found.

A survey by the tax expert has found that the main reason for this is the economic volatility that the UK has experienced in the past year, with inflation currently sat far higher than the Bank of England's target of 2%, high interest rates and wider economic uncertainty contributing to this slowing of inheritance being passed down.

However, UHNWIs who are pressing ahead with plans to pass down capital are, on average, looking to give £1.36m to loved ones in the coming five years.

Mazars said this is part of the wider wealth transfer boom, as those who have benefitted from notable rises in asset and property wealth begin to pass money down to younger generations.

Estimates suggest that total wealth transfers are set to grow by £100bn to 2025, reaching £355bn by 2047.

However, the research found that although 39% of UHNWIs trust that younger generations are well equipped to manage inherited money, one in five (19%) are worried that money will fall into the wrong hands, whilst 16% don’t trust those on the received end.

As a result, 15% said they have put stipulations in place around how and when the money can be spent, with one in five (20%) UHNWIs stating they have actively decided not to gift assets to younger generations, in order to teach the value of money.

The survey found that gifting is set to be the main way that wealth moves through generations, with 43% of UHNWIs planning to utilise this as a tool, alongside family businesses (39%) and the creation of family trusts (37%).

Just over a third (34%) also plan to use their pension to efficiently pass on wealth.

With some UHNWIs delaying their plans, Mazars’ analysis of inheritance tax (IHT) receipts show the tax has increased by 108% in the last decade, with HM Revenue and Customs collecting £7.1bn in the year ending 2022/23, compared to £3.4bn in 2013/14.

Partner at Mazars, Paul Barham, said: “Economic volatility has prompted even the wealthiest to review their inheritance plans. Uncertainty, like we have experienced in the last year, often prompts people to preserve wealth in fear of what might happen. But delaying plans raises alarms bells.

“There are many strategies people can adopt to efficiently pass wealth through generations, but what many of them need is time. Time to plan, establish family trusts and make use of the lifetime allowances that can form part of an overall estate planning exercise. Any delay could ultimately mean a bigger tax bill on the estate when it is passed to loved ones.

“The nil rate ban freeze has been worth its weight in gold for the treasury as IHT raises record amounts year on year. While the future of IHT is in the spotlight, financial plans should never be made on speculation. The best advice has, and continues to be, plan as early as possible.”

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