Inheritance tax: Ways to give your children and grandchildren money tax free | Personal Finance | Finance

“Using a discretionary trust gives grandparents the greatest flexibility and control, but the taxation is higher and more complex. You should seek Financial Advice if you are considering using a trust to help you select the right option for your circumstances.”

Britons should also consider using their pension savings as a way of passing some cash. In the UK if a person is aged 55 years or over, people can access their pension savings and usually get 25 percent of their pot tax-free.

Ms Holt said that people could then use some of the tax-free lump sum as a gift to their loved ones.

She added: “Bear in mind that your pension savings need to last you throughout your retirement, so make sure you’re not giving away anything that you might need to rely on later.

“Plus, using your pension pot to help out your loved ones doesn’t necessarily have to be done in your lifetime – especially if taking money out now means you won’t have enough left to provide for yourself. You could also think about nominating a family member as a beneficiary so that your pension plan could be passed on to them.

“Your pension plan isn’t normally included as part of your estate, so your beneficiaries won’t pay any IHT on it, although they could pay income tax on anything they chose to withdraw if you were to die after the age of 75. This doesn’t apply to all pension plans, so do check with your provider if you’re not sure.”