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Family matters: Grandparents step up financial support in cost-of-living crisis


Whether we’re struggling with an issue related to our health, wealth or happiness, in times of crisis, our loved ones are typically the first people we turn to for help.

This has certainly been the case during the cost-of-living crisis, with huge numbers receiving financial assistance from those closest to them. Indeed, research from the LV= Wealth and Wellbeing Monitor found that more than 20 million UK adults provided financial help to family and friends in the first six months of 2022 as prices for energy, food and fuel soared.

Typically speaking, it is older generations who are stepping up their efforts to help younger adults and their families who are facing an increasingly difficult balancing act when it comes to their household budgets. Their generosity is being put towards everything from day-to-day living costs, energy bills and childcare as well as being used to pay off debts.

A smaller proportion are seeking to provide longer-term help, contributing to savings for the future or funding house deposits for those looking to get on the property ladder.

Among those 20 million people sharing their wealth during the cost-of-living crisis are an estimated 4.3 million retired people. Known as the Bank of Gran and Grandad, these retirees are drawing on their savings and investments to help friends and family members, with a particular focus on their grandchildren. Indeed, the average amount given by the Bank of Gran and Grandad (BOGAG) to grandchildren is estimated to be £15,000, which is more than double the £7,000 average given by this group.

Handing down wealth affords older generations the chance to pass on the financial benefits they might have accrued over the long term through the property market, and their impetus for doing so might have been encouraged by the government’s recent commitment to the triple lock on pensions in the recent Autumn Statement. But when it comes to giving, there are some key aspects to consider.


Each tax year individuals can give away gifts or possessions to friends and family up to a total of £3,000 without them being counted within the value of your estate – in other words, they are free of Inheritance Tax (IHT). This allowance is known as the annual exemption. If it is unused then it can be carried forward to the next tax year – but only for one tax year.

In addition to normal birthday or Christmas gifts from your regular income, which are exempt from Inheritance Tax, the small gift allowance also means you can give as many gifts as you want to a person each year – as long as they are up to £250 in value and you have not used another allowance (such as your annual exemption) on the same person.

The 7-year rule

Recipients of gifts that fall outside of allowances might be liable to pay IHT if you give away more than the £325,000 IHT threshold and the gift was made within seven years of your death. Generally speaking, no tax will be due if you die seven years or more after the gift was received.

For gifts that do incur IHT for the beneficiary, the amount will depend on when in relation to your death they were given. Anything given within three years is taxed at 40%, while gifts given within three to seven years are taxed on a sliding scale known as ‘taper relief’.

Regular payments

When it comes to making ongoing payments to help with living costs, it is also possible to give money tax-free from your surplus income. The government defines this as payments from ‘normal expenditure out of income’ – that’s to say you can afford the payments after meeting your usual living costs and they are paid from your regular monthly income.

However, this is a complex area, and meeting the criteria for this exemption demands a commitment to regular gifting and requires that all activity is reflected in robust record keeping.


The areas referenced above are just some of the key things to consider when it comes to gifting, highlighting the complexities that grandparents can face in achieving the relatively straightforward aim of providing financial help to their families.

By treading a careful line, however, it is possible to minimise your potential tax burden while maximising the impact that your money can have on the lives of loved ones.


The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.

You should be aware that the value of an investment can fall as well as rise and that investors may not get back the amount they invested.