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Investments Retirement Estate Planning Inheritance Taxation
As grandparents, what could you do now to help your grandchildren get a head start in life as well as ultimately reduce your IHT liability?
Amy Woolliscroft17th June 2026
The changes to Inheritance Tax (IHT) announced in the 2024 Autumn Budget have created an unprecedented impact to intergenerational financial planning for families, challenging almost everything that we had previously relied on to ensure a smooth transition of assets from one generation to the next.
Whilst it used to make sense to hold on to assets, we now know that we have to think about passing on farms, rental properties and other businesses to the next generation much earlier to avoid an IHT liability, as well as using tools in the box such as protection and trusts to protect anything above the new APR and BR thresholds (£2.5m per person, or £5m per couple).
The ‘new norm’ for IHT planning is now largely understood and came into effect on 6th April 2026, but one thing lots of people still haven’t addressed is the change to pensions, where private pensions will fall within your estate from 6th April 2027.
Don’t forget, tax rules and reliefs depend on individual circumstances and may change over time. As a result, tax outcomes will differ between investors and should be considered alongside your wider financial position, which is why it is important to work with a trusted and qualified financial planning professional.
It may have previously made sense to keep building that pension pot up beyond what you needed in the safe knowledge that it could be passed on to your beneficiaries without incurring any tax. Whilst it’s true that spouses can still inherit that pension without incurring IHT, if your inheritance plan was to leave the business to one child and your pension pot to another, that’s no longer such an attractive idea.
So, with that in mind, what can you do now, as parents and grandparents, to make use of your pension and other financial assets to both reduce the IHT bill for the next generation while supporting their own financial goals?
Pay off student loans or pay university or private school fees up front
Grandparents who can afford it may reduce the size of their estate by making gifts toward student loans. They could either repay loans in full, starting the seven-year clock for potentially exempt transfers, or use their annual £3,000 gifting allowance each year to pay down part of the debt. Beyond tax planning, clearing the loan can give graduates a financial head start by removing monthly repayments early in their careers.
Parents still often fund education costs, particularly if they have previously paid private school fees. However, more grandparents are contributing, both to support family members and manage their future IHT exposure.
This comes as the attitudes toward student debt are shifting. High interest rates and repayment structures mean balances can grow over time, prompting families to treat the issue as part of broader intergenerational financial planning.
However, we must stress that such gifts should be carefully structured and form part of a wider financial strategy to ensure they comply with IHT rules, whilst bearing in mind that tax treatment depends on individual circumstances and the rules can change at any time.
Save and invest for your children and grandchildren
JISAs (Junior Individual Savings Accounts) can only be opened by parents or guardians, but once they are open anyone can pay in up to the £9,000 annual allowance. They can access these funds from the age of 18.
As with JISAs, private pensions can only be opened by parents or guardians, but you can contribute up to £2,880 per child every tax year with basic rate tax relief of 20% (added automatically) taking the gross annual contribution to £3,600.
You could also consider an investment account in trust, with no limit on how much you contribute but more control over the access, or a more flexible child’s savings account, which would allow the child to learn about savings and shorter-term savings goals.
Please remember that the value of investments can rise and fall. Positive returns are more likely if you invest for the long term, but this is not guaranteed and you could get back less than you invest.
Use your gifting allowance (£3,000 per person, per annum), gifting out of regular income, and wedding or civil partnership gifts
In the UK, you can give away up to £3,000 each tax year with no Inheritance Tax (IHT) due, and this can be carried forward for one year if you don’t use it. Additionally, you can make unlimited small gifts of up to £250 per person per year, and larger gifts become completely tax-free if you survive for seven years.
You can also make regular gifts (for example paying a child’s rent or a monthly allowance) directly from your surplus income without this counting towards your estate for IHT purposes – critically this must come from regular income and not capital. Please check with your financial adviser to make sure your gifting out of regular income plan is compliant.
Don’t forget that you can also gift £5,000 per person as parents, and £2,500 per person as grandparents (e.g. granny and grandad could gift £5,000 between them to their granddaughter, mum and dad could gift £10,000 in total) as a wedding or civil partnership gift. This must be given before the legal ceremony takes place but is another useful tool in helping reduce your estate for IHT purposes whilst giving your loved ones a leg-up as they start married life together.
Gifting allowances are subject to current tax benefit and relief levels and can change at any time – tax treatment is also depended on individual circumstances so always check with your financial planner before gifting.
Can I gift above the gifting allowances?
In short, yes, you can, but if you gift above your annual allowance, it is known as a Potentially Exempt Transfer and only becomes entirely tax-free if you survive for seven years after the date you gave it away. If you gift above the (current) £325,000 nil rate band then taper relief applies if you die within seven years of the gift on a sliding scale from 40% to 8%.
How can we at Accession help?
Intergenerational financial planning, including inheritance tax planning, is complex and is at the core of the advice we offer families that we work with, making a daunting task more manageable.
We specialise in providing high-quality, face-to-face financial planning and intergenerational wealth management for farming and rural families across Bedfordshire, Cambridgeshire, Northamptonshire and the surrounding counties.
All three Accession financial advisers – Emma Wilcock, Joe Moricca and Richard Jones - are Chartered Financial Planners and Fellows of the Personal Finance Society, accolades held by a very small number of financial advisers in the UK and meaning we are fully equipped to help you with all aspects of financial planning. They are also all Top-Rated Financial Advisers with VouchedFor, the independent review platform for professional services.
If you or someone you know would benefit from speaking to one of our advisers about retirement planning, please do contact us on 01832 279170 or accession@sjpp.co.uk to discuss your requirements and get an appointment in the diary.
Trusts are not regulated by the Financial Conduct Authority.
SJP Approved 17/6/2026