Nearly three quarters of people don’t understand Inheritance Tax
| Most UK adults know about Inheritance Tax but don’t understand how it actually works | Few people seek advice, increasing the risk of unexpected tax bills for their beneficiaries | Inheritance remains a taboo topic, yet open conversations can help families plan more effectively |
Inheritance Tax (IHT) often features in the news, but a new report shows most people still don’t understand how it works.
A recent report1 has found that while 77% of UK adults were aware of IHT, 71% didn’t understand IHT rules or what their beneficiaries might have to pay. More troublingly, just 27% of respondents planned on taking advice about how to deal with a potential IHT liability due on their estate. This lack of action will likely lead to unexpected tax bills and added stress for loved ones.
The ’last great family taboo’
The report surveyed 1,000 adults across four generations, and revealed that 40% consider inheritance and estate planning to be the ‘last great family taboo.’ Millennials emerged as the most forward-thinking generation when it comes to their finances. Yet were the least likely to have sought professional advice, which could cost them in the long run.
Also, a general reluctance to have conversations with loved ones around inheritance can be costly, especially as rising property values have pulled more estates into the IHT net. Given the government has announced plans to include pensions within IHT from 2027, even more families could be left facing an IHT bill in future.
Time to talk it out
The good news is that it’s not too late to rethink current estate and retirement plans. Estate planning can be a catalyst for some much-needed family conversations around wealth and legacy.
1Schroders Personal Wealth’s Family and Finances Report, 2025
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for guidance only. Some rules may vary in different parts of the UK.