Inheritance tax (IHT) changes are driving demand for tax and estate planning advice as six in ten professional advisors report an increase in demand for their services. Nine in ten professionals believe estate and tax planning will become even more important following IHT changes, and 65% said they believe charitable tax incentives will become even more important to their client base.
A new report by legacy awareness fundraiser Remember a Charity asks the question as to whether IHT changes would drive demand, just 15% said they thought there would be ‘discernible’ impact. The remainder were either anticipating greater demand (79%) or were already seeing greater demand for estate and IHT planning (60%) and tax planning (56%)
In the Autumn Budget 2024, the Chancellor announced that IHT thresholds would remain frozen until 2030, with pension wealth no longer exempt from IHT from April 2027. As such, it’s estimated that the proportion of estates facing an IHT bill will almost double by 2030 according to the The Office for Budget Responsibility (OBR).
The opportunity to use charitable tax incentives will become even more important in the future said 65% of the survey respondents and with evidence suggesting the proportion of estates that leave a legacy has increased from 17% in 2016 to 21% by 2024 there is a huge opportunity to ‘close the gap’ say Remember a Charity; indeed as many as two in five people would be happy to leave a charitable donation in their will according to a 2023 consumer poll.
“The changes to IHT are prompting a fundamental reassessment of estate planning strategies, particularly among clients who may not have previously been impacted. What we’re seeing is a growing need for tailored advice that balances financial objectives with personal values. Charitable giving can be a highly effective planning tool, and these changes provide a timely reason for advisers to revisit legacy plans with clients who may not have considered this route before.”
said Tanya Watson, Chartered Tax Adviser and Senior Director at Alvarez & Marsal Tax LLP.
Professional advisers play a ‘key role’ in driving change, say Remember a Charity, encouraging them to raise the charitable option with clients and supporting clients’ decision-making to donate. Over two thirds (77%) of solicitors and Will-writers now say they always or sometimes proactively raise the charitable option with clients (up from 72% in 2023). ‘Tax incentives’ are the most prevalent reason advisers give for raising the topic of legacy giving with clients. 92% of solicitors and Will-writers and 86% of financial advisers in the study say they always or sometimes advise their Will-writing clients of the charitable tax incentives.
Eleanor Evans TEP, Partner, Trusts and Estates Administration at Hugh James, says:
“We’re already seeing an increase in clients seeking early advice on estate planning. Many people choose to leave legacies to benefit a cause they care about, and the tax breaks for gifts to charity provide an added incentive. As more estates will become liable for IHT once the changes take effect, charitable giving is becoming an increasingly important part of the estate planning conversation.”
Lucinda Frostick, Director of Remember A Charity concludes
“Across the advisory spectrum, we’re seeing more advisers referencing the option of charitable giving when talking to clients about their estate and inheritance planning. While the reasons for giving extend far beyond tax incentives, the fiscal framework forms a natural starting point and these IHT changes make the legacy conversation even more relevant to a wider group. This is helping to build understanding of legacy giving and to inspire more people to support the good causes they care about – alongside their loved ones – from their estate.”
A separate report estimated the number of charitable estates hit 46,000 in 2024, around 16% of all probate cases. Legacy gifts now make up an average of 30% of fundraised income across the top 1,000 legacy supported charities, with some sectors such as animal, conservation, and disability charities seeing figures as high as 50%.
