High-net-worth families are turning to ‘gifting with control’ strategies as they seek to combat inheritance tax liabilities, according to utmost.
Figures from HM Revenue and Customs show that frozen IHT thresholds are already set to drive tax receipts to a fifth consecutive annual record haul in 2025/26, with IHT receipts on track to total £70.6 billion between 2025/26 and 2030/31.
Forthcoming reforms bringing unused pension funds within the scope of inheritance tax from 2027 are also affecting wealth planning strategies, with pensions historically used as a vehicle for passing on wealth outside the estate.
As a result, utmost said clients are increasingly exploring lifetime gifting to reduce the taxable value of their estate. However, advisers warn that outright gifts can leave donors exposed if circumstances change through life events such as divorce or if beneficiaries receive substantial wealth before they are financially prepared.
As such, rather than making outright transfers, many families are seeking structures that allow them to retain oversight of how wealth is distributed to future generations. This approach, known as ‘gifting with control’ can involve placing assets into trusts or other planning structures allowing funds to be released gradually.
Mark Jephcott, senior relationship manager at utmost’s wealth advisory business, said: “With inheritance tax receipts continuing to increase and further tightening of the regime being implemented over the rest of the decade, many families are reassessing how and when they pass on wealth.
“Historically many clients expected to use pension assets as part of their legacy planning, but with those funds falling within the inheritance tax net from April 2027, lifetime gifting is becoming a more common part of that conversation.
“Rather than making outright gifts, families are increasingly looking at structures, like trusts or insurance-based solutions, that allow wealth to be transferred while retaining a degree of control over how it is used. These controls can be relaxed at specific milestones and help to ensure assets are protected and passed on efficiently while supporting long-term family objectives.”
Utmost said for advisers, the shift reflects a broader change in how clients approach succession planning. Instead of treating inheritance as a single event, families are increasingly planning how wealth will move between generations over time, balancing tax efficiency with responsible stewardship.
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