Close to three quarters of people do not understand how inheritance tax (IHT) works, research by Schroders Personal Wealth (SPW) has found.
SPW said that while 77% of respondents it spoke to are familiar with the concept, 71% admit they don’t understand how it works or what their beneficiaries might have to pay.
To compound this, more than 40% of people do not have a will in place, SPW noted. The most common reasons for this were lack of time, or believing it is too early.
The Family and Finances Report 2025 surveyed 1,000 UK adults across four age groups to examine how different generations perceive and manage their finances.
It also found that 40% of people believe inheritance and estate planning is the ‘last great family taboo’.
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Almost half of respondents identified lack of planning for later-life care as a common financial misstep, yet 40% admit they haven’t addressed it themselves. 41% recognise that not discussing finances is a widespread issue, but over a third rarely, or never broach the subject with their family.
Millennials – born between 1981 and 1996 – emerged as the most proactive age group in planning for their financial future.
They appeared to be knowledgeable on financial planning matters, but the group was the least likely to have sought professional financial advice, SPW found.
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Ben Waterhouse, chief client officer at Schroders Personal Wealth, said: “At Schroders Personal Wealth, we understand that discussing finances can often feel uncomfortable, yet it is essential for securing the financial future of our loved ones.
“This report highlights the importance of intergenerational planning and the need for open conversations about inheritance and estate planning. By addressing these topics early, families can avoid potential conflicts and make informed decisions that aim to benefit everyone involved.
“We encourage everyone to start these crucial conversations today to ensure peace of mind and financial confidence future generations.”
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Alex Gaita, financial planning director at the firm, added: “Getting our financial affairs in order is something many of us put off, but it becomes increasingly important as we think about the future. While a will and Lasting Power of Attorney is a good start, they don’t address the wider considerations needed when it comes to reducing IHT.
“That’s where early planning could make a real difference. It can be quite a difficult topic but when I speak to clients about how their money could help the next generation – from their children, even to their great grandchildren’s future – the conversation shifts. They start to think not just about what they’ve built, but about the legacy they want to leave behind.”
