Retirees are gifting more and spending more amid mounting concerns about inheritance tax bills, says Investec Save.
The firm’s study found one in five retired adults expect to face an IHT bill when they or their partner die and are already taking action to try and minimise any future liabilities.
The findings come as government data estimates that IHT receipts will be £9 billion in the 2025/26 tax year and rise to £14.5 billion by the 2030/31 tax year, driven in part by the inclusion of pensions in IHT calculations from April next year.
According to Investec Save, around a quarter (23%) of retirees say they are gifting more money now in order to reduce potential IHT bills, while 15% say they are spending more to reduce the value of their estate. Around one in 20 say they are actively spending their children’s inheritance.
However, the survey revealed a lack of understanding around the tax rules. Nearly half (44%) say they gift what they want, when they want, while one in three (31%) is unaware of the seven-year rule for potentially exempt transfers.
In contrast, just one in 20 say they keep details on gifts, while more than half (54%) say tax laws do not dictate their gifting. More than two out of five (43%) are not aware of the annual £3,000 gift allowance and over three quarters (78%) do not regularly review their will or financial plans in response to law changes.
David Hunt, head of savings at Investec Bank, said: “Concern about inheritance tax bills is changing how retired people manage their money, with many gifting more and spending more than they would have otherwise in order to minimise potential bills in the future.
“The worry, however, is that there may not be enough planning in what people are doing and they may risk issues in the future either by overspending or giving away too much money or by failing to keep up to date with tax rules. It makes sense to have money available in savings accounts in order to help ease any problems.”
