Wealth professionals are anticipating a surge in demand for financial advisers as almost one in 10 deaths are set to trigger an inheritance tax (IHT) charge by the end of the decade.

The proportion of deaths subject to IHT is forecast to nearly double from 5.1% in 2022/23 to 9.5% in 2029/30, according to the Office for Budget Responsibility (OBR).

In the Budget on 30 October, Chancellor, Rachel Reeves, announced that the freeze on the nil rate band (NRB) and residence NRB will be extended to 2029/30, alongside changes to Business Relief and Agricultural Relief, and bringing pensions into scope of IHT.

The IHT system will also see reforms for resident non-doms (RND) through the removal of the link between domicile and IHT, meaning that RNDs in the UK for more than four years will be subject to UK taxation on their global income and gains.

IHT will also follow them when they leave the UK if they have been a UK resident for 10 out of the past 20 years, with this new status taking as long as 10 years to lose.

Utmost Wealth Solutions stated that the reforms created a “growing opportunity” for intermediaries to help clients efficiently manage their estates as a rising number of estates get caught in the IHT net over the coming years.

The number of deaths subject to IHT is anticipated to increase from 35,000 in 2022/23 to 66,600 in 2029/30.

This increase in the number of deaths being in scope of IHT is expected to trigger a rise in demand for advisers in the UK.

Utmost Wealth Solutions global wealth specialist, Marc Acheson, stated that while IHT is often described as one of the UK’s most unpopular taxes, it can be perceived as ‘voluntary’ in that there are steps that can be taken to reduce its impact.

“The reforms announced by the Chancellor will create a growing opportunity for advisers as more and more individuals seek help in navigating the new rules with the OBR estimating that, by the end of the decade, twice as many people will be impacted by IHT every year,” Acheson continued.

“In the short term, we expect to see a surge in demand from individuals looking to re-engage advisers and reconsider their plans. The clampdown on the number of assets exempt from IHT will see strategies shift to lifetime gifting earlier and more often to individuals or trusts as well as spending pension pots.

“The Budget is also likely to increase interest in insurance policies and death benefits that can protect individuals against IHT liabilities while unit linked life assurance could help advisers defer tax for their clients until a chargeable event occurs.”

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