Only 8% of IFAs claim to still be in the dark over the changes to inheritance tax and trusts, claims Friends Provident.
A survey of 200 advisers reveals 28% believe they have a good understanding of the new rules, while 64% claim to have at least some understanding of the changes announced in the March budget.
The changes, which apply to new trusts created since 22 March and to older trusts from 6 April 2008, mainly affect interest in possession (IIP) trusts and effectively mean any assets will be subject to chargeable gains when paid to the beneficiary.
But despite the uncertainty surrounding the exact charges and who would be affected, Friends Provident says its research reveals 53% of IFAs are now confident about recommending IHT solutions to a client while 16% are very confident.
It claims the new rules have had an impact on most advisers with only 9% stating their client base has been unaffected by the changes, while around half of the remaining 81% say the changes have affected up to 20% of their clients, although 17% say it affects between 21% and 40% of their customers.
Christine Foyster, head of wealth management at Friends Provident, says there have been a lot of complex changes to IHT and trusts through the Budget and as a result it wanted to know if IFAs were benefiting from the education and workshops surrounding this issue.
She says: “We have been very pleased with the results of the survey, in fact the numbers are better than expected and it seems advisers are handling the situation well and being very realistic.”
And the research suggests although the changes have hit advisers’ client bases, 72% says the new rules have not seen a decrease in the average premium size, as people try and keep within the nil rate band for IHT.
Foyster says this itself says a lot about consumer confidence as IFAs are obviously clearly explaining all the important facts to customers and they are continuing to engage in IHT planning.
Although Foyster says the issue of IHT and trusts is still not crystal clear, as there is a need to occasionally go back and check with the Financial Services Authority (FSA) and HM Revenue and Customs (HMRC) for guidance on some issues, while there are areas of uncertainty still surrounding peripheries such as bare trusts.
But she says Friends Provident is concentrating on the areas of legislation which has the most clarity and is continually working with the government and industry bodies so as soon as clarification is received on any outstanding issues it is passed straight on to the advisers.
She says: “The IHT changes came as a bolt from the blue, which shook the industry and left behind an air of uncertainty. There was a real danger consumers would switch off from IHT planning because of confusion surrounding the new rules.”
However, she says by gaining an understanding of the rules and continuing to advise with confidence, IFAs have been able to reassure clients and get back to providing IHT planning and sensible solutions to help families avoid the IHT trap.
“This is a great achievement and a real thumbs up for the industry. IHT doesn’t look like a problem which is going to reduce, and with 72% of families expected to be affected there is a growing market and we have to make sure advisers are well equipped to deal with this area of the market,” adds Foyster.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
Senior Managers Regime
Interest rate outlook unchaged
FCA made demands last week
'Unsung' part of FSCS work