The UK-based arm of French insurance giant Axa this month is launching a campaign aimed at suggesting IFAs and wealth managers remember the importance of helping their wealthier clients to map out strategies, aimed at minimising the amount of inheritance tax their estates must pay when they die.
Axa has produced a new suite of literature on the subject which it plans to begin distributing within the next few weeks. Its sales team has also been briefed to engage with advisers on the matter – which, Axa experts note, is not an easy one for many people to get right.
According to Richard Leeson, sales and marketing director at Axa Isle of Man, there was a noticeable fall-off in interest in IHT planning during and immediately after the last UK election, on the part of some advisers and their clients. This is thought to have been because the Conservative party, which seemed likely to win, proposed in its manifesto to raise to £1m (from £325,000) the net worth threshold at which UK taxpayers became liable for IHT.
Although the Conservatives in fact did not win, and instead formed a coalition government with the Liberal Democrats – whose position on IHT, generally speaking, is that most people who should pay it don’t pay enough – collective focus on IHT as an issue had begun to dissipate.
As IHT began to come in lower on clients’ lists of priorities, advisers responded by focusing on other concerns, Leeson explained.
At the same time, “with RDR looming and IFAs [consequently] becoming better qualified, we’re seeing more of them migrating to the higher-net-worth end of the market, where they are more likely to meet clients who have potential IHT problems than they might have seen previously”.
Though it is difficult to generalise about IHT solutions, Leeson said, they fall into one of two categories, one of which involves the client taking out an insurance policy to pay the tax on behalf of one’s beneficiaries, and the other which seeks to reduce the tax bill itself, “usually through some form of gifting”.
At Axa, a product which does this is the company’s Estate Planning Bond, which allows a client to make a gift that, after seven years, drops off the client’s IHT tax equation, Leeson said.
