There has been a sharp increase in the number of people seeking inheritance tax (IHT) planning advice as a result of pension freedoms and rising property prices.

These are findings of new research by Prudential, which revealed that around 33% of advisers questioned report a rise in enquiries from clients about inheritance tax planning in the past year, and 52% expect demand for IHT advice to rise over the next 12 months. On average 15% of clients are currently actively seeking IHT advice. 

However, more clients are apparently being caught in the inheritance tax trap, with Government figures showing receipts are set to hit a record high of £4.6 billion in the 2015/16 tax year, up 21% on the previous year’s £3.8 billion.

Rising property prices are the main reason for the increase in enquiries, with 44% of advisers saying clients are increasingly asking for inheritance planning support due to the value of their homes. 

However, pension freedom reform - which has enabled pension pots to be passed through generations either tax-free or at a lower tax rate and the abolition of the so-called death tax – is also a significant factor in driving inheritance tax enquiries, the research shows. 

Around 20% of advisers say pension freedoms have had a major influence on inheritance tax enquiries, and that this is reflected in the levels of interest being shown in moving defined benefits savings into defined contribution schemes.

The abolition of the death tax, which applied to untouched funds of savers dying after age 75 or those who had accessed their fund through drawdown at any age, is another factor. 

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