Living Inheritance: how grandparents are reshaping the transfer of wealth

Recent estimates from the Institute for Fiscal Studies suggest the annual value of financial gifts in the UK has now reached £17 billion, with around £9.6 billion going directly towards helping first-time buyers purchase a home. The growing reliance on family wealth highlights the increasing pressure younger generations face in saving for deposits independently, amid general ongoing affordability challenges.

These figures reflect a broader attitudinal shift. A recent survey of 2,126 UK adults aged 45 and over, found that 81% believe parents or grandparents should help younger generations financially during their lifetime rather than just leaving an inheritance on death. A further 83% say younger generations are more reliant on family support than previous ones.

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While early inheritance can help children and grandchildren get onto the property ladder, clear debts, or build financial stability, it’s important for those making the gifts to make sure that they don’t fall foul of the gifting rules if they are also hoping to reduce a potential inheritance tax (IHT) liability, and to ensure that they don’t leave themselves financially exposed later in retirement.

Estates of those aged 85+ account for almost 60% of cases of lifetime gifts

According to a Freedom of Information (FOI) request made to His Majesty's Revenue and Customs (HMRC) in May 2026, data shows that in 2022/23 people aged 85 and over account for nearly 60% of all estates that included gifts, as well as the largest share of the total value gifted, suggesting that gifting is largely an end-of-life financial decision.

That said, feedback from our survey suggests this timing does not always reflect preference. We found that 71% of those surveyed say financial support should be given “early, when it can make the biggest impact”. Only 8% believe wealth should mainly be passed on after death, pointing to a growing gap between when people currently give and when they feel it would have a bigger impact.

The figures from the FOI request also show that only a minority of lifetime gifts end up being taxed through inheritance tax. In 2022–23, around 15% of estates that included gifts paid inheritance tax on them, suggesting most gifts fell within tax-free allowances or were otherwise exempt.

86% of those surveyed have already gifted or loaned money to family members

The vast majority of those surveyed have already acted on their views, with 82% having gifted outright, whilst 12% have loaned the money. The purpose of the support tells an interesting story. Property purchase comes at the top of the list, with 51% of those citing this reason. This is followed by general living support (20%) and educational costs (8%).  

Among those who have not yet gifted (14%), 40% plan to do so. Of those, outright gifts before death remain the preferred form (59%), with inheritance via a will cited by nearly a third.

Family financial assistance remains a major factor in UK homeownership  

Our survey underlines just how important helping loved ones onto the housing ladder has become. 97% of those surveyed say it is difficult or very difficult for young people to buy a home without family support, and 80% believe homeownership is becoming increasingly dependent on family wealth. Meanwhile, 88% say they would consider helping children or grandchildren to purchase a property, with property purchase already accounting for 51% of all support given by survey respondents, making it by far the most common use of family wealth.

External data supports this picture. Savills' 2025 property report found that 52% of first-time buyers in 2024 received family financial assistance, with the average contribution now reaching an eye watering £55,572.  

The Bank of Mum & Dad provided £38.5 billion in support over the past four years, a 71% increase compared to the previous four-year period. Rising interest rates and more challenging mortgage conditions have made it increasingly difficult for younger buyers to purchase without help from family members.

The benefits and risks of early inheritance gifting

Our survey* confirms that the willingness to give sooner is high with 64% of those surveyed saying they would feel comfortable giving a large sum to younger family members during their lifetime. Yet retirement security remains a genuine brake on generosity. The biggest barrier to early gifting is the fear of running out of money in later life, cited by 37% of respondents, followed by concern about care home costs (16%). Together, these account for more than half of all concerns raised, reinforcing the importance of professional financial planning for anyone considering gifting in their lifetime.

What this research makes clear is that the 'Bank of Mum and Dad' has also become the Bank of Grandparents too. We're seeing a genuine generational shift in how people think about wealth — away from the traditional inheritance model and towards active, purposeful giving during their lifetime.

Early inheritance gifting can be a great way to provide financial support to loved ones at key life stages, but it must be balanced carefully against long-term income needs, tax considerations and estate planning objectives. With the right structure in place, families can pass on wealth in a way that is both efficient and aligned with their wider financial plans, reducing the risk of unintended tax consequences or future shortfalls in retirement income.

The question isn't always 'should I give?’, it's 'how much can I safely give?' That's exactly where good financial planning makes a real difference. With the right advice, families can transfer wealth in a way that supports the next generation without compromising their own retirement.

If you are considering gifting as part of your wider estate or retirement strategy, it is worth seeking tailored advice before making any decisions; if you make a mistake, it can be costly. HMRC collected an estimated £336 million in inheritance tax (IHT) over the past five years from failed gifting arrangements, after the assets involved were deemed not to have been fully given away.  

*The findings are drawn from a survey of 2,126 The Private Office newsletter subscribers, conducted in May 2026. The sample is weighted heavily towards older, asset-rich homeowners, reflecting the demographic most likely to be engaged in intergenerational wealth transfer. Respondents skewed towards the 65 and over age group (77% of the sample), with 40.1% aged 65 to 74 and 36.9% aged 75 and over. The remaining respondents were aged 55 to 64 (18.2%), 45 to 54 (3.8%) and under 45 (1.0%). In terms of housing status, 91.3% were outright homeowners, 5.5% held a mortgage, 1.4% rented privately, and 1.8% fell into other categories. 75.3% of respondents had children, grandchildren, or both.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. The Financial Conduct Authority (FCA) does not regulate tax advice.  

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice.