Contact

News & Insights

Blacktower View: Saving for grandchildren

With the majority of the UK population having mortgages and other debts, it is becoming more and more common for grandparents to fund their grandchildren’s education costs rather than their parents. In doing so, they are not only helping their family, but they could also be benefitting from useful UK inheritance tax (IHT) breaks. The amount that you can hold in your estate before IHT is payable is presently £325,000. Taking high UK property prices into consideration, it is no longer the super-rich who have potential IHT problems to consider. If your assets are above the threshold level, then making one off or regular gifts to your grandchildren is worth considering.

Making gifts

IHT rules state that you can make regular gifts out of income so long as in doing so your own quality of life is not affected. For example, if your guaranteed pension income was £50,000 a year and your living expenses amounted to £35,000 a year then in theory you could make an annual gift of up to £15,000. Gifts of this nature are then regarded as being outside your estate for IHT purposes after seven years having elapsed from making the gift(s). In addition, there is the annual exemption rule whereby you can make gifts of £3,000 each year without any test against your ‘income’. If you have not used up the allowance in any one tax year then you can carry it forward a year and gift £6,000, in total, in that particular tax year.

Seeking advice

Whilst making gifts of this nature would help your family and your own IHT issues, it is important to factor in other potential expenses such as long-term care costs for yourself, or unexpected medical expenses. You would not wish a situation to occur whereby you were paying for your grandchildren’s’ school fees but then had to tell them that you couldn’t continue as your own expenses had escalated. It is essential, therefore, to seek professional advice to create a plan for your savings and potential unforeseen expenses.

When to start gifting

Due to current IHT rules, it is best to start gifting as soon as financially possible. If you have a newly born grandchild, then gifting money into a savings plan that will fund or partially fund their future education costs is a great way of helping them. Rather than merely depositing the funds into a bank account, investing the money into a managed fund is a great idea as it could be 10-20 years before the money is actually needed. This way, you would expect the growth of the savings investment scheme to outperform cash rates and inflation. There are a number of companies that offer these savings schemes and with the right advice, you can really make a difference to your grandchildren’s futures.

 

The content of this article is for information purposes only and does not constitute advice.

Other News

Buying residential property overseas in 2017 post-Trump with Brexit influences

Advice on buying overseas property from financial expert Simon Conn:

After the “shocks” of 2016, how will the overseas property market be affected in 2017 and will the most popular areas still be of interest? Although the Trump and Brexit decisions did have an initial effect on clients potentially purchasing an overseas property – where some people have deferred until the markets have settled down in the USA after the Presidential inauguration and Article 50 is finally implemented – others have seen this as a good time to look for opportunities and bargains available in the market.

Read More

Sweden’s best city for study

Office Desk and LaptopNordic countries have a very good reputation with international students, and Sweden is no exception. But where in the country offers the best environment for study?

The Swedish National Union of Students (SFS) has recently announced the winner of its 2017/2018 Student City of the Year award. The award goes to the city that actively works to improve the welfare of students, and this year it went to the city of Gävle.

Gävle is the capital of the Gävleborg County, located at the very lower end of Norrland. It’s the country’s 13th most populated city and is perhaps best known to the public for its unique Christmas tradition. Every year, a large straw goat, known as the Gävleblocken (or “the Gävle Goat”), is erected in the centre of the city and then, in a more unofficial tradition, tends to get destroyed by the locals.

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information:

You are currently viewing the Blacktower Financial Management EU website.

You may be looking for the Blacktower United States website.

Blacktower United States > X Stay on this site

Or choose your country.