Recent changes to IHT legislation mean that unused pensions are expected to fall within an individual’s estate from 2027. As a result, advisers are increasingly focusing on how clients can efficiently pass on their wealth to loved ones.

The good news is, our platform supports intergenerational wealth transfers in many ways. We have a range of products and platform capabilities that can facilitate the passing on of client assets at different life stages. This includes options designed specifically for younger beneficiaries.

Investment Accounts

General Investment Accounts can be an effective way to pass on wealth to adult beneficiaries. Accounts can be held jointly, with up to four holders visible online, with additional holders supported in our back-office system. These operate on a joint tenant basis – this means that, on the death of an account holder, ownership passes automatically to the surviving account holders.

Investment Accounts can also be used as a flexible staging point for future gifting or tax planning strategies. In addition, they can be a useful investment wrapper when considering gifts into Bare Trusts for children or grandchildren under the age of majority.

ISAs

Alongside our adult Stocks & Shares ISA, we also offer a Junior ISA for those looking to invest on behalf of children. Providing a tax-efficient wrapper for long-term growth, they can be funded through lump sum or regular contributions, making them suitable for ongoing gifting strategies. Junior ISAs convert to adult ISAs at age 18, at which point control passes fully to the beneficiary.

Pensions

Where appropriate, and assuming they can access their pension, clients can utilise pension savings to create regular withdrawals to establish a sustainable pattern of gifting to future generations. The withdrawals may be tax free, taxable, or a combination of the two by using our Phased Drawdown facility. By making gifts on a regular basis, advisers can help clients support the next generation through tax-efficient wrappers such as Junior ISAs and Junior Pensions. Where the relevant conditions are met, these gifts may benefit from the normal expenditure out of income exemption and, if so, enjoy immediate relief from any IHT.

For clients looking to support younger family members, directing regular gifts into Junior ISAs and Junior Pensions can form part of a structured intergenerational planning strategy. Regular pension withdrawals used to fund these contributions can help establish a clear and consistent pattern of gifting, while creating a straightforward and well-documented approach to passing wealth between generations.

If using our Junior Pension as part of a gifting strategy, it can be funded through lump sum or regular contributions which benefit from pension tax relief. As with our ISA, no Investor Fee is charged on our Junior Pension.

Platform functionality – accessing the products in practice

Our platform provides a range of tools to support the efficient movement of assets for tax planning purposes:

• Online stock transfers: you can quickly move assets between Investment Accounts on our platform – transfers between individuals can be completed online in just minutes. Where transfers are between non-spouses/civil partners, it may be appropriate to sell to cash first to ensure accurate CGT reporting. More on online stock transfers here.

Using the online stock transfer facility

• Spouse/civil partner transfers: assets can be transferred between Investment Accounts of spouses or civil partners and acquisition costs can be updated accordingly. More on spouse/civil partners transfers here.

• Gifting to adult children: as mentioned above, assets can also be passed to Investment Accounts of adult beneficiaries using the online stock transfer capability. 
• Bed & Pension facility: assets can be moved from a client’s Investment Account into their Pension without them leaving the platform. Please note this facility is only available for solely-held Investment Accounts. More on Bed & Pension facility here.

Where appropriate, this can also be combined with inter-spouse transfers where relevant. In this case, an online stock transfer can be carried out from the Investment Account (sole or joint) of one spouse or civil partner to a solely-held account of the other spouse or civil partner. Once the assets are in the receiving spouse’s Investment Account, a Bed & Pension exercise can then be carried out (the normal pension contribution rules apply). This process avoids the cash leaving the platform.

• Bed & ISA facility: a one-step journey allows assets to be efficiently moved from an Investment Account (sole or joint) into an ISA. More on Bed & ISA here.

This can also be combined with spouse-to-spouse transfers to optimise allowances without additional paperwork. For third-party Bed & ISA exercises (e.g. spouse to spouse), the online stock transfer capability can be used to transfer assets from one spouse’s Investment Account to their partner’s Investment Account. Once the assets have been moved, you can conduct a Bed & ISA exercise online for the receiving spouse, avoiding the need for paperwork and without the cash leaving the platform.

Using Junior products in practice

Junior products are very useful tools when it comes to intergenerational wealth transfers but, operationally, require a slightly different approach. As assets cannot be transferred directly into a Junior ISA or Junior Pension, funding must be made through new contributions. As such, a typical adviser journey may look as follows:

• Identifying and preparing the funding source: this may come from a parent or grandparent’s Investment Account, cash holdings, or excess income. Where investments are used, assets will typically need to be sold, with consideration given to any tax implications.
• Withdrawing and reintroducing funds: proceeds are withdrawn from the platform to the donor’s nominated bank account and then paid back as a new contribution into the Junior ISA or Junior Pension.
• Structuring contributions effectively: contributions can be made as lump sums or regular payments, allowing advisers to align them with annual allowances, gifting strategies, and cash flow planning. Phasing over multiple tax years may be appropriate.
• Aligning to client objectives: Junior ISAs may be suitable where access at age 18 is acceptable and a tax-efficient savings/investment vehicle is required. Junior Pensions are typically used for longer-term planning, where funds are intended for retirement and early access is not a priority.

Starting contributions early, particularly in the case of pensions, can significantly enhance outcomes through compounding and tax relief. Of course, contributing to Junior products may form part of a broader gifting strategy, including use of annual exemptions or gifting from normal expenditure out of income.

A more comprehensive examination of strategies that can potentially help clients address the inheritance tax changes being introduced in April 2027 is contained within our retirement paper Rethinking estate planning. We have also published A guide to inheritance tax, that can act as an aide-memoire and a ready reference guide to inheritance tax planning.