IHT Law Changes Will Boost The Bank Of Family, New Survey Reveals

Changes to inheritance tax (IHT) rules are set to increase the financial support provided through the Bank of Family, new research from Investec Save shows.

More than one in five (22%) retired people say they plan to increase how much they give their family over the next five years as a direct result of the changes. These include bringing most unused pension funds and pension death benefits into estates for IHT purposes from 6 April 2027 and freezing IHT thresholds until April 2031.

Investec Save’s research found that two out of five (40%) provided financial support for adult children and grandchildren in the past 12 months. Nearly half (46%) of them gave up to £1,000 but one in six (17%) handed over more than £5,000 in financial support during the 12 months.

They were most likely to have provided help with day-to-day bills and holidays. Around 28% say they helped with everyday bills and 25% gave money for holidays or leisure spending while 28% said they gave cash but did not know what their children or grandchildren spent the money on.

Around one in eight (12%) say the money they gave was for a house deposit while 7% say they helped out with mortgage or rent payments. One in 10 helped pay for childcare or activities while 9% contributed to weddings or other major family events.

Giving money to family can create emotional as well as financial concerns. Nearly half (47%) of respondents with children or grandchildren worry about treating family members fairly when providing support.

Over the next five years the financial value of the help for family will increase with more than half (52%) of those questioned expecting to give money. That includes 18% who expect to give £20,000 or more. Around 6% estimate they will give £50,000 or more.

David Hunt, Head of Savings, Investec Bank, said:

“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.”

Investec Save’s range of accounts can be opened online in minutes and are fully managed online with no hidden fees or charges. The Online Flexi Saver, which currently offers 3.79% AER, is a simple and secure instant access savings account. Unlimited deposits and withdrawals are allowed. This makes the Online Flexi Saver worth considering for unexpected expenses.

Its 1-Year Fixed Rate Cash ISA, which currently pays 4.95% AER, enables customers to lock in higher rates for longer, helping them grow their savings and make the most of their tax-free ISA allowance each tax year. It is available to all eligible customers, whether they are opening a new ISA to fund using their current annual allowance or transferring in an existing cash ISA from another provider.

The Fixed Rate Saver offers 1-Year term at 5.00% AER, 2-Year term at 5.16% AER or 3-Year term at 5.19% AER. Interest is paid on maturity of the 1-Year term and annually on the 2-Year and 3-Year terms. No withdrawals are permitted until the end of the term in each case, and no further deposits can be made after the first seven days.

In addition, its 90-Day Notice Saver, which currently pays 4.00% AER, offers unlimited deposits with withdrawals subject to 90-days’ notice.

For more information on Investec Save products, visit here.