Tax efficient ways to pass down wealth

We all want to secure the best possible future for our loved ones. Ensuring that your hard-earned wealth benefits your family rather than being significantly reduced by taxes is a major concern for many. By planning strategically, you can pass down your assets in a tax-efficient manner. Here are key considerations to help you navigate this process effectively.

Know What You’re Worth

Start by evaluating your financial assets. List how many pension pots you might have if you’ve changed jobs, find share certificates, check in on your ISAs or savings accounts. Having a clear picture of your net worth is the first step toward effective financial planning.

Think Long term

The earlier you can plan; the more options you have to share your wealth efficiently. Do you want to help put your children or grandchildren through private education? Do you want to gift money for their first home? Is it time to start planning for your legacy? Proactive planning allows you to align your wealth with your family’s future needs.

Helping the whole family

If some family members have more money than others, there are smart ways to share the wealth without getting hit with unnecessary taxes. You might want to help with school fees, cover care costs for elderly relatives, or chip in for a loved one’s new home. With good financial advice, you can make sure your money goes where it’s needed most.

Planning your legacy: IHT Planning

With careful estate planning, you can cut down on how much Inheritance Tax (IHT) your family has to pay. Right now, the first £325,000 of your estate is tax-free (this is called the Nil Rate Band, or NRB). If you’re passing your home to children or grandchildren, you could get an extra £175,000 tax-free under the Residence Nil Rate Band (RNRB).

That said, there’s a big change coming—starting April 6, 2027, most pension funds will be counted as part of your estate for IHT. This means more people could end up paying inheritance tax, so planning ahead is more important than ever.

Talk it through with a professional

Tax rules can be complicated, and everyone’s situation is different. A financial expert can help you figure out the best way to pass down your wealth in a way that makes sense for you and your family. With the right strategy, you can make sure your loved ones benefit the most from what you leave behind.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.