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\t\tGrandparents are looking to avoid inheritance tax changes\t<\/p>\n\t\t\tThursday 13 August 2026 12:13 pm\n\t\t\t<\/p>\n
\t\tGrandparents are looking to avoid inheritance tax changes\t<\/p>\n
Wealthy grandparents are choosing to fund their grandchildren\u2019s university education over leaving a large inheritance as they look to avoid the shake up to the tax system.<\/p>\n
The bank of grandma and grandad has played a greater role within UK families in recent years, as parents continue to be squeezed by rising costs.\u00a0<\/p>\n
In particular, soaring higher education costs and the subsequent debt have made teenagers increasingly dependent on financial pools available from family members.\u00a0<\/p>\n
Nearly two-thirds of students say their grandparents contribute towards their education or are planning to, according to the latest data from top wealth manager Rathbones.<\/p>\n
One in five grandparents confirmed they cover all or most of university costs, while 59 per cent said family support is combined with student borrowing.\u00a0<\/p>\n
This reflects a growing problem among<\/a> students who are finding their loan does not stretch far enough to cover basic needs.<\/p>\n Dodging estate planning<\/p>\n But grandparents\u2019 generosity isn\u2019t solely tied to ensuring their grandchildren succeed. More than two-thirds admitted inheritance tax considerations influenced their decision to help.<\/p>\n From April 2027, unused pension wealth will be brought into the scope of inheritance tax for the first time, causing thousands of families to lose their exemption.<\/p>\n The change has prompted many families to reassess their estate planning to avoid a hefty tax bill. Nearly 70 per cent said the looming changes increased their desire to fund university costs during their lifetime instead of leaving it as part of their estate.<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tIHT receipts hit record high as Rachel Reeves\u2019 frozen bands raid plague Brits<\/a><\/p>\n Malvee Vaja, chartered financial planner at Rathbones, said: \u201cFor many<\/a> grandparents, helping with education can achieve two objectives at once.<\/p>\n \u201cSupporting children and grandchildren at a crucial stage of life while potentially forming part of a broader intergenerational wealth transfer strategy.\u201d<\/p>\n Concerns on debt<\/p>\n Grandparents emptying their pockets also comes as the Department of Education confirms updated student loan interest rates for the upcoming 2026\/27 academic year. Some borrowers will continue to face interest charges of up to six per cent.<\/p>\n The decision to leave these interest rates high has seen backlash from graduates who argue they are being crippled by swelling debt after being misled over repayments.<\/p>\n