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Apr 01

Brits banking on an inheritance could be left feeling the financial pinch

Reading Time: 4 mins

Ninety per cent of Brits say they are relying on an inheritance to pay off debts and afford retirement, but few know how long probate takes and who is responsible for paying an inheritance tax bill, says the latest report from inheritance specialist Tower Street Finance.

The survey of 2,000 UK adults revealed that the average Brit expects to receive an inheritance of £214,000 with 67 per cent saying it is likely to be left to them by their parents.

Six per cent, however, have loftier expectations and believe they are in line to be left a legacy of between £750,000 to over £1m.

People expecting to receive an inheritance from an estate worth more than £325,000 could find themselves with the unpleasant task of paying a 40 per cent inheritance tax bill, before an inheritance is released – something 86 per cent of the people asked in the poll were unaware of.

Furthermore 63 per cent of people don’t realise that the process of receiving an inheritance, called probate, can take anything from 9 to 12 months.

The survey showed that for the majority of people receiving an inheritance is the only way they will be able to afford retirement or become debt free.

Over a quarter (27 per cent) said they are reliant on being left an inheritance for a retirement income and 11 per cent said it would be used to top up a pension pot.

A further 21 per cent said they are banking on being able to use a legacy to become mortgage free.

Nineteen per cent said the windfall would enable them to pay off debts such as credit cards and personal loans, while 7 per cent said an inheritance would help them afford current living expenses.


Why Brits are banking on an inheritance

  1. Paying off mortgage – 21 per cent
  2. Paying living costs in retirement – 16 per cent
  3. Paying for funeral costs – 13 per cent
  4. Paying off credit card debt – 11 per cent
  5. Investing it into a pension – 11 per cent
  6. Paying off personal loans – 8 per cent
  7. Paying living costs – 7 per cent
  8. University costs for children – 7 per cent
  9. Care costs for elderly relatives – 4 per cent

People living in London admit to relying on receiving the highest level of inheritance anywhere in the UK with an average of £312,000. In comparison, with the lowest level of expectation, people in Northern Ireland estimate they will be left around £130,000.

Men think they are in store for a £320,000 windfall, while women think they’ll be gifted around a quarter of a million pounds.

Tower Street Finance also researched where the inheritance was expected to come from and discovered that parents were the most likely source, but that 11 per cent also believe they will be left something by grandparents.

Surprisingly, only 17 per cent think their spouse will leave them anything.


Who do Brits expect to receive an inheritance from?

  • Parent – 67 per cent
  • Spouse – 17 per cent
  • Grandparent – 11 per cent
  • Aunt – 7 per cent
  • Sibling – 7 per cent
  • Uncle – 6 per cent
  • Other family – 5 per cent
  • Step-parent – 5 per cent
  • Cousin – 3 per cent

Andrew Bartle, founder and managing director of Tower Street Finance, said:

“While our research did reveal that some people plan to spend an inheritance on a treat for themselves, such as holidays or a new house or car, overwhelmingly we found that Brits are relying on a gift from a loved one to cover the cost of essentials, such as paying household bills and being able to retire in the future.

“This shows that we are either a nation of frugal spenders, and savers, or that for a large number of people an inheritance is a real lifeline so they can achieve a level of financial stability free from debts.

“If that’s the case, they could be in for a shock about when they can access an inheritance. As our research also shows, few people know that probate can take anything from 9 to 12 months, or longer for complex cases, to complete.

“And for those expecting more than £325,000 to be left to them, 20 per cent admitted that they had no idea anything above this could result in an Inheritance Tax bill which needs to be paid upfront before any assets can be released.

“This is why we created our Inheritance Advance and Inheritance Tax Loan products – to provide a solution to these two challenges.”

Tower Street Finance offers products that make it easier for people to access their inheritance.

Its award-winning Inheritance Advance product enables beneficiaries to access to up to 60 per cent of an inheritance before probate has been granted, while its Inheritance Tax Loan has been designed to help executors pay any tax liabilities to HRMC directly so an estate can be released.

Both products benefit from no credit checks, there is no charge over property, no personal liability or monthly repayments, and come with fixed monthly interest rates.

The loan is repaid from the estate funds once it is ready to distribute. There is a 2 per cent origination fee, capped at £1,500 which can be added to the loan, and a fixed yearly interest rate of 19.6 per cent. Interest roll up is capped at 30 months. Representative 22 per cent APR.

For more information call 0343 504 7100 or visit  www.towerstreetfinance.co.uk

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7 months ago

A wake up call to many of us.

7 months ago

Very informative article.

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