Changes to inheritance tax (IHT) rules are set to increase the financial support provided through the ‘Bank of Family’, Investec Save has found.

More than one in five (22%) retired people have stated that they plan to increase how much they give their family over the next five years as a direct result of the changes. These changes include bringing most unused pension funds and pension death benefits into estates for IHT purposes from April 2027, and freezing IHT thresholds until April 2031.

The firm’s research found that 40% provided financial support for adult children and grandchildren in the past 12 months, with nearly half (46%) giving up to £1,000. Meanwhile, one in six (17%) handed over more than £5,000 in financial support in the same period.

Investec Save said these payments were most likely to have provided help with day-to-day bills and holidays. Over a quarter (28%) say they helped with everyday bulls and 25% gave money for holidays or leisure spending, while 28% stated they gave cash but did not know what it would be spent on.

Around one in eight (12%) said the money was for a house deposit, while 7% added they helped with a mortgage or rent payments.

One in 10 helped pay for childcare, while a similar proportion (9%) contributed to weddings or other major family events.

Investec Save added that over the next five years, the financial value of help for family will increase, with 52% of those questioned expected to give money. This includes 18% who expect to give £20,000 or more, while 6% estimate they will give £50,000 or more.

Head of savings at Investec Bank, David Hunt, concluded: "Changes to IHT are prompting some retired people to think differently about when they support their families, with 22% planning to increase what they give over the next five years.

"The sums can be significant, with nearly one in five of those planning to provide support expecting to give at least £20,000. Before making substantial gifts, people should consider how much they may need for their own retirement, potential care costs, unexpected expenses and tax treatment."

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