MoneySuperMarket has put together a guide to the various ways grandparents can pass on money to their grandchildren without triggering a hefty tax bill. It runs through the £3,000 annual Inheritance Tax exemption (which can be carried forward for one unused year), small gifts of up to £250, wedding gifts, the "normal expenditure out of income" rule, the seven-year rule and taper relief, Junior ISAs, Premium Bonds, pension contributions, trusts, and life insurance.
The article also includes commentary from Lisa Picardo, Chief Business Officer UK at PensionBee, on the Inheritance Tax changes to pensions coming into effect from 6 April 2027. She explains that pensions will no longer sit outside the estate for Inheritance Tax purposes as they do today, and that beneficiaries could face a "double tax" of both Inheritance Tax and Income Tax if the deceased was 75 or over at death, making it more important than ever to choose beneficiaries carefully and talk to loved ones about their wishes.
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