Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
With millions of Britons struggling financially, many are turning to the bank of mum and dad to make ends meet, according to research by financial advice firm Continuum.
The firm said that while many Britons plan on leaving their wealth to future generations on their death, others are not waiting until they pass away to help.
One in five investors said they plan to use money from their investments to help family members battle the rising cost of living, helping to cover mortgage payments and household bills.
However, Continuum said Britons need to be careful with their gifting to not be caught out by unexpected tax bills.
Richard Watkins, certified financial planner and chartered wealth manager at Continuum, said many older savers have seen the problems the younger generations are having with their finances at the moment and are asking us how they can best offer financial support.
However, he said that while a pre-inheritance can give loved ones the cash they need when they need it, it is important that people don’t create big financial problems for themselves or their loved ones down the line.
He added that there can be some tax advantages of passing on wealth before death.
Inheritance tax is becoming an increasing burden for many and is charged at 40 per cent of everything in an estate above a £325,000 threshold, although there are some concessions relating to the family home.
Yet, giving wealth away while an individual is still alive does not avoid IHT, as if the estate is worth more than £325,000, it will need to be done seven or more years before death to avoid IHT.
If an individual dies within that seven-year period, there’s a sliding scale of liability. For example, beneficiaries will pay 40 per cent if the individual died within three years, and 24 per cent if it was between four and five years.
Last month, it was reported that HM Revenue and Customs saw a boost of almost £1bn last year in inheritance tax receipts.
Inheritance tax intake for April 2022 to February 2023 totalled £6.4bn, an increase of £0.9bn on the same period a year earlier.
If you want a better view of what your future could be, we'll have a chat and work out if we make a good fit for you and your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
We are committed to providing products and service of the very highest standards. If you feel that we haven't lived up to your expectations in any way, however, we would like to know so we can put things right for you. If you have a complaint, make sure you contact us directly. Accordingly, we will do all we can to resolve your complaint by the end of the next business day. However, if we can't do this, we will write to you within five working days to tell you what we have done to resolve the problem, or acknowledge your complaint and let you know when you can expect a full response. Furthermore, if we haven't issued our response within eight weeks from the date you first raised your complaint, or if you're dissatisfied with our response, you can ask the Financial Ombudsman Service - www.financial-ombudsman.org.uk - for an independent review. The Financial Ombudsman Service will only consider your complaint once you've tried to resolve it with us, so please take up your concerns with us first and we'll do all we can to help.
Wealth of Advice Ltd is a company registered in England and Wales, company number 07709624.
VAT Number: GB131946515