71% of UK adults don't understand IHT, Schroders report reveals

A new report from Schroders Personal Wealth (SPW) has revealed a worrying gap between what families know they should be doing to plan financially, and what’s actually getting done.

The Family and Finances Report 2025, based on a survey of 1,000 UK adults across different age groups, found that while most people recognise the importance of estate and financial planning, many haven’t taken essential steps like writing a will or discussing inheritance openly with loved ones.

Inheritance confusion still widespread

Perhaps the most striking finding is that 71% of respondents don’t understand how Inheritance Tax (IHT) works, despite 77% claiming to be familiar with the term.

This suggests that while IHT is widely known, the details, especially how it could impact beneficiaries, remain a mystery for most.

Alex Gaita, Financial Planning Director at SPW, commented:

“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.”

Will writing put off by many

More than 40% of people said they don’t currently have a will, with the most common reasons being that they haven’t had the time or believe it’s too early.

Worryingly, 14% are simply trusting their family to ‘sort things out’, a decision that could lead to stress and costly mistakes for loved ones left behind.

The ‘last great family taboo’

The report describes inheritance and estate planning as the “last great family taboo.”

Nearly 40% of UK adults avoid the topic, and 34% say they rarely or never discuss finances with their families at all.

This reluctance to talk about money can leave serious gaps in understanding and planning, especially across generations.

Ben Waterhouse, Chief Client Officer at SPW, said:

"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.”

Later-life care planning often overlooked

Another key issue is planning for care in later life. Despite nearly half of respondents recognising a lack of planning for future care as a major financial mistake, 40% admitted they haven’t done anything to prepare for it themselves.

This disconnect between awareness and action appears throughout the findings, highlighting a national tendency to delay or avoid financial planning conversations—even when people know they’re important.

Millennials taking the lead

One of the more surprising insights is that Millennials (born 1981–1996) are among the most proactive when it comes to planning their financial future.

Many are as knowledgeable, or more so, than older generations. Yet they are also the least likely to have sought professional financial advice, suggesting a knowledge-action gap that may limit the effectiveness of their planning.

Interestingly, 28% of Millennials have already gifted significant assets to loved ones, just shy of the 34% of retirees who have done the same.

This suggests younger adults are increasingly engaged in supporting family finances, despite not always having the guidance they need.

Get expert financial advice

SPW’s report serves as a timely reminder that planning for the future isn’t just about having money, it’s about talking about it, making informed choices, and thinking long-term.

Speaking with a qualified financial adviser can help individuals and families build greater confidence, improve money management, and make the most of their financial opportunities.