Advisers say changes in last Autumn’s Budget have made them more likely to consider trust-based solutions for Inheritance Tax Planning (IHT) planning – the research found 79% of advisers say they are more likely to consider trusts as a direct result of the Budget.
HSBC Life (UK) believes there should be more conversations with clients around inheritance tax planning. Most recent Government figures show a record £8.2 billion was paid in IHT in the year from April 2024 to March 2025 which is an £800 million rise on the previous year and the fourth record year in a row.
Research for the report, The Three I’s of Investable Capital 2025, shows advisers are working hard to support clients with IHT and more than two out of three (68%) of clients have discussed IHT planning with their adviser.
However less than half (47%) of advised clients have solutions in place to reduce or plan for potential IHT on their estate. More than two out of five (42%) admit they have not taken action and a further 11% are unsure if they should do. Nearly a third of clients (29%) say their adviser has raised IHT planning with them, but they have not taken action.
HSBC Life (UK) says taking an intergenerational approach to financial planning could be a ‘win, win’, potentially delivering improved financial planning outcomes for clients and more business opportunities for advisers.
Almost all (98%) of advisers questioned for the report say that taking an intergenerational approach to planning is important to clients but estimate that 38% of clients who should be planning for IHT are not.
The Three I’s report on tax efficient capital investment, produced in partnership with Technical Connection, incorporates a strong focus on how, in the right circumstances, onshore investment bonds deliver tax efficient outcomes for investors.
Mark Lambert, Head of Onshore Bond Distribution, HSBC Life (UK) Limited, said: “It has never been more important for advisers to actively engage clients and their dependents on intergenerational wealth transfers. Record IHT receipts, and demand from clients for support, clearly makes the case for advisers to redouble efforts on estate planning. As part of this, we believe advisers will be seriously considering making the fullest use of the relevant tax effective wrappers available, including onshore bonds. Combined with an appropriate trust, onshore bonds can form part of a highly tax efficient estate planning strategy with simplified tax administration.”
HSBC Life (UK)’s 2025 report provides an in-depth review of the role that investable capital plays in the fulfilment of financial plans through all the key stages of the financial journey - wealth creation, decumulation and drawdown of wealth plus wealth transfer.
Onshore bonds offer zero tax on cash dividends at a policyholder level while non-dividend income is taxed at 20%. Capital gains realised within the Bond are subject to UK life fund taxation. This “fund level” taxation treatment of income and capital gains results in a full basic rate credit being available to the investor when a chargeable event arises. This, in effect, means that the policyholder is treated as having paid basic rate tax on these gains. Top slicing relief and 5% p.a. tax deferred rules on withdrawals remain. Lifetime transfers by way of assignment without consideration are not taxable events.
HSBC Life (UK) Limited does not replicate funds offered by external fund managers. It enables investment in the funds directly, ensuring that consistency of approach across the investment solutions that advisers recommend to their clients.
Please click here to download the report:
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