Helping your children with money
Compare the ways you could help your grown-up children: what each saves in inheritance tax, what happens if you die within 7 years, and what your children get in hand.
Your answer
Answer the questions to compare the ways you could help.
About this calculator
For parents of grown-up children who want to help with money now and want to know how each way affects inheritance tax.
This is about tax, not investment advice. Talk to us before a large gift.
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How it’s worked out
A gift is free of inheritance tax once you've lived 7 years after it. The first £3,000 you give each year is outside your estate straight away, and so is regular help from income you don't need to live on. If you die within 7 years, the gift uses up your £325,000 tax-free amount first. Only gifts above that amount are taxed on the gift itself, at less the longer you live: 32% after 3 years, falling by 8 points a year to nothing after 7.
A loan stays in your estate, as money owed to you. Paying into your child's pension gets 20% tax relief: £2,880 from you becomes £3,600 if they don't earn. Your home has an extra allowance of up to £175,000 when it goes to your children.
Worked example
If you live 7 more years, giving £100,000 saves your family £40,000 of inheritance tax.
widowed: late partner's allowances in full · home to your children · one giver · this year's £3,000 allowance unused · no earlier gifts · death from 6 April 2027
| Your home (going to your children) | £650,000 |
|---|---|
| Savings and investments | £400,000 |
| Unused pensions (counted from 6 April 2027) | £150,000 |
| Your estate | £1,200,000 |
| Less the tax-free amount, with your late partner's | − £650,000 |
| Less the extra allowance for the home going to your children | − £350,000 |
| Inheritance tax if you don't help | £80,000 |
| A lump sum now: £50,000 for each of 2 children | £100,000 |
| Less the yearly gift allowance | − £3,000 |
| On the 7-year clock | £97,000 |
| Inheritance tax if you die within 7 years | £78,800 |
| Inheritance tax if you die after 7 years or more | £40,000 |
| Saved if you live 7 years | £40,000 |
| Regular help from income: saves £1,200 if you die within 3 years, £40,000 after 7; each child gets £50,000 | £40,000 |
| A deposit for a home: saves £1,200 if you die within 3 years, £40,000 after 7; each child gets £50,000 | £40,000 |
| A loan, not a gift: saves £0 if you die within 3 years, £0 after 7; each child borrows £50,000 to repay | £0 |
| Paying into their pension: saves £1,200 if you die within 3 years, £40,000 after 7; each child gets £50,720 with tax relief | £40,000 |
Worked out using HMRC's inheritance tax thresholds, rates and gift rules for 2026/27, for a death from 6 April 2027. Not legal or investment advice.
Questions people ask
Does my child pay tax on money I give them?
No. Your child pays no tax on a gift. If you die within 7 years and your gifts add up to more than your tax-free amount, the tax on the gift can fall to them.
What counts as a gift from income?
Regular gifts you make from your income, not your savings, that leave you enough to live on as usual. There's no upper limit. Keep a yearly record: your executors claim it on form IHT403.
Is a loan better than a gift?
Not for inheritance tax: a loan stays in your estate. It does let you get the money back. You can let part of it go each year as a gift.
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