February 10, 2025 at 12:23 PM GMT+0

UK Wealthy Turn to Life Assurance for Inheritance Tax Relief

Britain's affluent citizens are increasingly resorting to "whole of life" insurance policies to mitigate inheritance tax burdens in what some experts describe as an "economic own goal" for Labour. According to Yahoo Finance, wealth managers anticipate a surge in the establishment of life assurances in trusts, which are exempt from the 40% death duties applied to estates.

Unlike standard life insurance that covers a specific term, 'whole of life' assurance ensures lifetime coverage, paying out assured sums to beneficiaries. Industry experts note its significant tax advantages, providing cash lifelines to cover hefty inheritance duties without immediate asset liquidation.

Jo Eccles of Eccord commented, "Since the Budget, tax planning has been center stage for our high-net-worth clients, especially those purchasing properties over £10m. Life assurance now plays a crucial role, offering financial tranquility to heirs."

Nicholas Hyett from Wealth Club emphasized its critical importance for preserving family businesses or farms, where hasty asset sales are challenging. However, he warned this strategic shift could detract from economic productivity, as capital is diverted away from investments towards tax management.

The Chancellor's Budget introduced from April 2027 will incorporate unused pensions into taxable estates, alongside a £1m cap on inheritance tax relief for farmlands, sparking discontent among British farmers. Advisory firms like Henley & Partners highlight these measures as exacerbating the impracticalities of the current inheritance tax system, one of the world's highest, compounded by sluggish probate processes.

Catrin Harrison noted a swell in client applications for life cover, as brokers race to implement policies before forthcoming tax amendments. Concurrently, the National Audit Office reported an uptick in HMRC's operational costs by 15%, estimating a cumulative increase of approximately £875m due to tax changes during 2022-2024.

Source: IndexBox Market Intelligence Platform

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  3. 3. MARKET OVERVIEW

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    9. Exports, In Physical Terms, By Country, 2012–2024
    10. Exports, In Value Terms, By Country, 2012–2024
    11. Export Prices, By Country Of Origin, 2012–2024
  13. LIST OF FIGURES

    1. Market Volume, In Physical Terms, 2012–2024
    2. Market Value, 2012–2024
    3. Consumption, By Country, 2024
    4. Market Volume Forecast to 2030
    5. Market Value Forecast to 2030
    6. Products: Market Size And Growth, By Type
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    10. Production Volume And Growth
    11. Exports And Growth
    12. Export Prices And Growth
    13. Market Size And Growth
    14. Per Capita Consumption
    15. Imports And Growth
    16. Import Prices
    17. Production, In Physical Terms, 2012–2024
    18. Production, In Value Terms, 2012–2024
    19. Production, By Country, 2024
    20. Production, In Physical Terms, By Country, 2012–2024
    21. Imports, In Physical Terms, 2012–2024
    22. Imports, In Value Terms, 2012–2024
    23. Imports, In Physical Terms, By Country, 2024
    24. Imports, In Physical Terms, By Country, 2012–2024
    25. Imports, In Value Terms, By Country, 2012–2024
    26. Import Prices, By Country, 2012–2024
    27. Exports, In Physical Terms, 2012–2024
    28. Exports, In Value Terms, 2012–2024
    29. Exports, In Physical Terms, By Country, 2024
    30. Exports, In Physical Terms, By Country, 2012–2024
    31. Exports, In Value Terms, By Country, 2012–2024
    32. Export Prices, 2012–2024

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