The Financial Times quotes Catrin Harrison on wealthy individuals increasingly using life insurance to help manage inheritance tax bills

As reported by the Financial Times, wealthy individuals in Britain are turning to life insurance to "reduce the pain of unexpected inheritance tax bills following a contentious overhaul of the system in the autumn Budget".

The piece notes that while there is no exact figure available for the number of high-net-worth individuals that have taken out life insurance cover, nor the amount that they have insured against, one insurance broker reported having policies covering "£3.5 billion, which represented inheritance tax on assets of £8.75 billion".

The article also notes that there had been some indications of increased demand in early 2024, when the then-Chancellor Jeremy Hunt announced plans to abolish the non-dom regime (a system that gave many wealthy individuals protection from inheritance tax on non-UK assets).

Catrin Harrison, Partner in our Private Client team, is quoted in the article and gives an account of the extent to which our Firm is seeing increasing interest in life insurance from indivuduals looking to navigate high inheritance tax bills. She comments:

Previously, we didn’t work with the insurance industry a great deal; we could structure pretty good protection, but now we have individuals who thought their non-UK wealth was protected and it’s suddenly not.

Catrin then explains that life insurance“can be surprisingly good value” and that if a non-dom had been paying the £90,000 annual fee to use the tax-favourable “remittance basis” under the previous regime, they could now be spending it on inheritance-tax protection instead.

Read the full article in the Financial Times here (subscription required).