Seventeen per cent of active savers over the age of 65 have started gifting cash in response to the Government’s plans to include pensions in inheritance tax (IHT) calculations from April 2027.
This is according to a study by Paragon Bank, which also found that one in four (25%) over-65s have increased the amount they give.
Paragon’s research, based on a survey of 1,385 active savers, indicated that most gifts are directed towards immediate family, with 71% of respondents giving to children and 46% to grandchildren. Charitable donations (15%) outpaced gifts to friends (5%).
These behavioural shifts come in light of the Government’s reforms to IHT. From 6 April 2027, most unused pension funds and death benefits will be included in the value of an individual’s estate for IHT purposes. Under current rules, individuals can gift up to £3,000 each tax year without it being added to the value of their estate, known as the annual exemption.
Paragon Bank head of savings, Andrew Wright, said: “Savers who are planning to give cash to loved ones should ensure their money is working hard for them in the meantime, earning a competitive rate of return. But it’s equally important to retain sufficient funds for their own future needs and gifting should be part of a balanced financial plan.”
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