UK residents over the age of 50 have gifted more than £22bn to their families over the past five years, with the primary motivation being to witness their loved ones enjoying the money, according to a report from SunLife.
The study comes amidst calls by senior Tory MPs, including former Chancellor Nadhim Zahawi, to abolish inheritance tax, labelled as ‘a spectre that haunts Britain’.
SunLife’s Life Well Spent report disclosed that 25% of over 50s, and 29% of retired over 50s, have given significant cash gifts to their families in the past five years.
Out of these individuals, 19% have gifted an early inheritance for their family’s enjoyment, averaging £20,778 per gift. This generosity equates to more than £22 billion being gifted across the UK.
Contrastingly, 7% gifted for tax purposes, with these individuals donating more money on average, £23,745, culminating in a combined total of £9.2 billion.
Significantly, the study revealed that gifting improves overall happiness among the over 50s. Nine out of ten respondents reported increased happiness after gifting money for their loved ones’ enjoyment. Notably, this act was more joy-inducing than gifting money towards a house deposit, which only improved happiness for 76% of the respondents.
The report also uncovered mixed attitudes towards inheritance. While 49% desired to leave inheritance to their family, even willing to reduce retirement spending to do so, 46% were more interested in spending their money while they’re alive.
Of this group, 27% prioritised enjoying their retirement, even if it meant leaving no inheritance, and 19% preferred to give early inheritance to enjoy watching their loved ones spend the money.
Furthermore, retirees proved to be more generous, with 26% dipping into their pension funds to provide an early inheritance, gifting an average of £21,799. 9% of this group gifted inheritance for tax purposes, offering a higher average sum of £36,675.
The report further indicates that more than a quarter of respondents were primarily concerned about their children and grandchildren’s financial management. This worry suggests that ensuring financial stability for their loved ones is a significant factor driving the trend of gifting cash to families.
Ian Atkinson, chief marketing officer at SunLife, said: “It’s clear to see that helping family out financially is a priority for many… ensuring loved ones are not struggling financially is a major factor in why so many over 50s are gifting cash to their families… however, there is another key driver here too – happiness… Nine in ten of those who have given early inheritance said doing so improved their overall happiness.”
