Gifting with purpose: Strategic wealth transfers in a changing landscape

As economic pressures continue to shape financial decisions across generations, many clients are revisiting how and when they pass on wealth.

Whether driven by a desire to support loved ones, reduce inheritance tax (IHT) exposure, or leave a philanthropic legacy, gifting remains one of the most powerful tools in estate planning.

We are seeing a rise in enquiries around structured gifting, particularly gifts into trusts and legacy giving. These conversations are not just about tax efficiency; they’re about values, timing, and impact.

Charitable gifting in lifetime and through wills

Gifting can take place either during a person’s lifetime or through their Will. Both approaches offer opportunities to reduce IHT and support family members or charitable causes.

Legacy gifts, whether made during lifetime or via a Will, are particularly effective. Gifts to registered charities are exempt from IHT, and if 10% or more of an estate is left to charity, the IHT rate on the remainder of the estate is reduced from 40% to 36%.

Smaller, local charities often rely heavily on legacy income to fund vital grassroots work in areas such as education, wellbeing, and poverty relief. These gifts can create a lasting legacy that continues to benefit communities for generations.

As trusted advisors, we are well placed to help you explore your philanthropic goals alongside your tax and estate planning. Whether it’s a first-time gift into a trust, a conversation about legacy giving, or a review of existing plans, we can guide you through the process.

Why now?

The current IHT nil-rate band remains frozen at £325,000, and with the residence nil-rate band also capped at £175,000, more estates are falling into taxable territory. For those with surplus wealth, gifting offers a proactive way to reduce future liabilities while supporting the next generation or causes close to their heart.

Gifting into trusts

One increasingly popular route is gifting into a trust. Trusts created for charitable purposes are not subject to an IHT charge. For non-charitable trusts, a gift of up to £325,000 into a discretionary trust is treated as a Chargeable Lifetime Transfer (CLT) and falls within the nil-rate band, meaning no immediate IHT is payable. This threshold refreshes every seven years, allowing for strategic planning over time.

Trusts offer control, protection, and flexibility, which can be particularly useful when beneficiaries are young or vulnerable. However, they do come with complexity: periodic charges, exit charges, compliance reporting requirements and other tax implications. Professional advice is essential to ensure the trust structure aligns with both tax and family objectives.

Lifetime gifting

In addition to charitable giving, there are several lifetime exemptions that are often overlooked:

• Annual exemption: £3,000 per year, with one year’s carry-forward. 
• Small gifts: Up to £250 per person, unlimited recipients. 
• Wedding gifts: Up to £5,000 for children, £2,500 for grandchildren, or £1,000 to anyone else 
• Gifts out of income: Unlimited, provided they are regular and do not affect the donor’s standard of living.

These exemptions can be used alongside trust planning to create a robust and tax-efficient gifting strategy. We recommend keeping a clear record of all gifts made, including the recipient, value, and date.

How we can help

If you are considering gifting, whether transferring funds into a trust, making regular gifts to family, or giving charitable legacies, our advisors are here to help. We offer tailored advice that balances tax efficiency with personal goals.

Click here to get in touch with one of our specialists today.