Canada Life said its research, carried out among wealthy individuals aged over-45 with over £325,000 in assets and based on 1,007 survey respondents, found the average amount they expected to leave was £655,122.
Inheritance tax has come to the fore in the UK recently after chancellor George Osborne said a future Conservative Party-led government would remove family homes worth up to £1m from inheritance tax. It plans to pay for the change by imposing higher taxes on the pension savings of people earning more than £150,000 a year.
At present, IHT is payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person so this average estate size found in the Canada Life survey would be £330,122 over the threshold for an individual, which would leave them with a tax bill of £132,000.
Canada Life said IHT planning is made more complicated by the fact that many wealthy savers over the age of 45 have four kinds of savings in addition to their property wealth – company and personal pensions, cash savings and stocks.
The research found that a vast majority of over 45s have cash savings (84%) while over half have stocks and shares (57%) – both of which would be included as part of IHT calculations.
It said families with their wealth tied up in multiple savings and investment products in addition to their property wealth are more likely to need professional financial advice on how to plan their estate to cut the risk of their families being left with a substantial IHT bill.
Wealth hotspots
The research also found the UK has some surprising wealth hotspots. In Wales and the North West respondents had higher average wealth outside of property than those in London and the South East.
“While many over 45s in London and the South East have benefited from surging house prices adding to their overall wealth in recent years, the position is more mixed when it comes to savings and investments outside of property,” Canada Life said.
The survey found that wealthy people in Wales had assets outside of property worth £285,571, while in the North West it was £262,327. This compared to £243,249 in London and £213,753 in the South East.
Sean Christian, Managing Director of Canada Life International Limited said the findings demonstrated there was clearly an important and ongoing role for financial advisers to help guide wealthy individuals with IHT planning.
“Rising house prices are one reason why inheritance planning is more important than ever. But a large number of people in the UK have very significant assets even before their property is taken into account.
“The significant levels of non-property wealth held by people outside of London and the South East may come as a surprise for some,” he said.
