Let’s face it – there aren’t that many people in their twenties who think about planning for retirement!
However, the subject of financial planning and inheritance tax may rear its head sooner than expected if tax reforms suggested by the Institute for Public Policy Research (IPPR) are introduced.
The report suggests all UK-born citizens should be given a £10,000 ‘universal minimum inheritance’ when they turn 25, to help address ‘growing wealth inequality’, and hints that the money could be used to help buy a property or start a business.
It also says the creation of a citizens’ wealth fund – worth £186b by 2029/30 – would give everyone a stake in the economy, and help younger people invest in their futures.
The fund could be large enough to pay all 25-year-olds a one off capital dividend of £10,000 by 2030.
Head of private client at Buckles Solicitors LLP, Stephen Duffy, commented: “As legal experts, we are constantly advising people on their wealth preservation, but more often than not, these clients tend to be from a slightly older generation.
“Inheritance tax, retirement planning and even care home fees aren’t naturally thought of by people in their twenties as issues to focus on at that particular time in their lives.
“However, this new kind of thinking being muted by the IPPR, if introduced, could transform our economy and the way we think about legally managing and investing our finances.
“Many younger people do not currently enjoy the access to housing, freedom to experiment and start businesses, or secure incomes that their parents’ generation enjoyed. A lump sum dividend would be transformative, enabling everyone to have the “opportunity effect” of assets, not just those set to inherit a large amount of wealth. We will watch the progress of this with interest.”
According to the IPPR, the wealthiest tenth of all UK households own 44% of the nation’s wealth, while the least wealthy half of households own 9%.
The fund would be managed independently from government to maximise returns for citizens, but invested in line with democratically set ethical obligations. For example, many funds are not permitted to invest in the arms and tobacco industries, or environmentally damaging businesses.