How to help your family financially

There are several options available that can be particularly useful if you are keen to provide for your loved ones. For example, any gifts you make – as long as they are made at least seven years before you pass away – are tax free, and you have a tax-free gift allowance of £3,000 per year**.

As a couple, you can combine these allowances to give you £6,000, and it’s worth remembering that it is possible to use unused allowances from a previous year too. You can give these gifts or money to one person or split the allowance between several people.

Additionally, the small gifts allowance means you can give as many gifts of up to £250 per person as you want each tax year, as long as you have not used another allowance on the same person. You are also free to make additional payments that are not liable for inheritance tax if they are regular and use excess income.

Where somebody is getting married or starting a civil partnership, you can give a tax-free wedding gift of up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to any other person each tax year.

Alternatively, if you would prefer your loved ones receive the financial support in the future, you may wish to consider making contributions to a child’s or grandchild’s pension pot or placing the money into a trust. For example, minors’ pensions can receive contributions up to a maximum of £3,600 per tax year with no tax penalties.

As highlighted by the research, families play a vital role in providing financial knowledge and security. Younger generations’ habits are often formed by what their parents did and as such it is natural they want to seek their advice on financial matters.

Working with a financial adviser and planning finances across multiple generations is a great way to build on that knowledge and ensure the family unit can work together for each other and themselves. As well as ensuring everyone is getting the right advice, financial advice can help ensure tax allowances are being used effectively across family members.

Everyone’s financial future is unique to them and as such engaging with a financial professional will enable you to create a tailored and individual financial plan that is specific to your circumstances. With people’s finances becoming increasingly complex, particularly when looking across generations, financial advice is crucial to ensure your money works as hard as it can.

Find out more about the benefits of financial advice, and how we can help you.

*Research completed via YouGov in November 2022 with 2176 adults. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2176 adults. Fieldwork was undertaken between 9 - 15 November 2022.  The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).

** All figures quoted in this article relate to the 2022/2023 tax year and may be subject to change in the future.