Four Tips for Helping Your Grandchildren Financially
With booming house prices and generous pension schemes, many grandparents in the UK are redistributing their income to help their grandchildren who face many financial challenges. A survey completed by OneFamily found that one in 10 grandparents have gifted a lump sum up to the value of £15,000.
However, some have faced challenges when assisting the younger generation. The Telegraph reports that one quarter of their readers haven’t been able to meet their own financial goals from assisting their family members.
See below our top 4 tips.
1. Reducing Inheritance Tax liability
Currently, the nil-rate band for Inheritance Tax is at £325,000 for those not wishing to give their home away to their children or grandchildren. However, this increases to £450,000 if you wish to leave your home to a loved one. To overcome some of these allowances, you can gift money to your grandchildren which will reduce Inheritance Tax liability. The rule is that you must survive the gift by at least 7 years to be exempt by IHT, otherwise the gift will be taxed under IHT.
The earlier you start to save, the more manageable it is and the more money will be available to your grandchildren in the future. For longer term saving, it’s a good idea to consider investment funds.
3. Use your tax-free pension allowance
Did you know you can access a 25% lump sum of your pension tax free? We can act as your local pension adviser and open the door to more effective techniques to make the most of your financial goals. This can be a huge contribution towards helping your grandchildren get onto the property ladder.
4. Speak to a local financial adviser
A financial adviser can recommend safe financial investments to accrue a higher yield. If you are looking for financial advice on inheritance tax or reducing inheritance tax liability, then talk to our local financial adviser team today. Please call on 01926 492406 or email us at enquiries@klofinancialservices.com to make an appointment.