Gifting remains one of the most straightforward and effective ways for families to transfer wealth to the next generation. It can be remarkably efficient from a tax perspective, and – when used thoughtfully – offers families real flexibility in how they shape their succession plans.
While there has been speculation that gifting rules could be revisited in the future, under current inheritance tax (IHT) rules the existing framework provides valuable opportunities for those considering the transition of wealth.
At its heart, gifting allows individuals to:
For many families, gifting is not only tax-efficient but also the most natural way to begin succession planning.
The UK system provides several exemptions that make gifting particularly attractive. The most common strategies are:
Outright gifts are simple, but some families are understandably cautious about parting with significant capital too soon. Common concerns include:
It is important to remember that gifting is not just about tax – it is also about family values. Many wealth holders wrestle with the question of how much to give and when to give it. The goal is often to provide enough to create opportunities, without removing the incentive for the next generation to carve their own path.
In such cases, structures such as trusts or family investment companies can offer a middle ground – allowing wealth to be passed on, but with greater control over how and when it is accessed. For example, discretionary trusts can ring-fence assets for multiple generations, while family investment companies can be structured so that a right to dividends and capital is only available when it is deemed appropriate.
For all its flexibility, gifting is not without limits particularly where use of trust arrangements is involved. Transfers into discretionary trusts, for example, are generally capped at £325,000 per individual every seven years without incurring tax. The exception to this is where the assets being gifted qualify for an IHT exemption at the time the gift is made, for example assets that qualify for business relief or agricultural property relief. However, there are upcoming changes to the treatment of business and agricultural assets that mean forward planning is increasingly important prior to the changes being introduced in April 2026.
What remains constant, however, is that gifting – whether through allowances, outright transfers, or more structured approaches – continues to be one of the most effective strategies for families thinking about succession.
Every family’s circumstances are unique, and gifting is as much about balancing personal priorities as it is about tax planning. For some, simplicity and immediacy are key; for others, maintaining control or protecting wealth across generations takes precedence.
Alongside the mechanics of gifting, families should also consider the framework within which wealth is passed on. Encouraging financial literacy, setting clear objectives and agreeing on governance structures can help ensure that gifts achieve more than just a tax saving – they can shape a legacy that supports opportunity, responsibility and long-term family purpose.
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