A growing number of UK retirees are embracing a lifestyle known as “SKI-ing” — or “Spending Kids’ Inheritance.” For many in their 60s and 70s, the focus has shifted from preserving a financial legacy to enjoying the fruits of their working lives through travel, hobbies, and luxury experiences.
While the trend reflects a desire for freedom in retirement, financial experts warn that there are strict rules regarding how wealth is spent or given away, particularly concerning inheritance tax and future social care costs.
The rise of the ‘SKIers’
The term describes a generation of pensioners who, bolstered by significant rises in property values over the last 30 years, feel they have a larger “equity cushion” than previous generations. Rather than keeping funds locked in savings accounts for a future legacy, many are choosing to fund cruises, world travel, or major home improvements now.
However, the “Bank of Mum and Dad” has not closed entirely. Many retirees are choosing to give money away during their lifetime rather than leaving it in a will, often to help children or grandchildren with house deposits or education costs. This “living inheritance” allows them to see the impact of their wealth, though it requires careful navigation of HM Revenue and Customs (HMRC) regulations.
Understanding the 2026/27 Tax Rules
For those planning to spend or give away their wealth, understanding the tax boundaries is essential to avoid unexpected bills. In the 2026/27 financial year, the standard Inheritance Tax (IHT) nil-rate band remains at £325,000. This is the amount an estate can be worth before IHT is typically charged at 40%.
There is also an additional “residence nil-rate band” of £175,000 available when passing a main residence to direct descendants, potentially bringing the tax-free threshold to £500,000 for individuals or £1 million for married couples and civil partners. According to official GOV.UK guidance, these thresholds are set to remain at these levels until at least April 2028.
Gifting and the ‘Seven-Year Rule’
Pensioners looking to reduce the size of their estate through gifting must navigate the “seven-year rule.” Any gift made more than seven years before death is typically exempt from IHT. However, if the giver dies within that window, the gift may be added back into the value of the estate for tax purposes, though the tax rate may be reduced through “taper relief” if the gift was made between three and seven years before death.
There are some exemptions that allow for immediate tax-free giving each year:
- Annual Exemption: Individuals can give away up to £3,000 in total each tax year without it being added to the value of their estate.
- Small Gifts: You can give as many gifts of up to £250 per person as you want each year, provided you have not used another exemption on that same person.
- Wedding Gifts: Parents can give up to £5,000 to a child as a wedding gift tax-free.
- Normal Expenditure out of Income: Regular gifts that do not affect your standard of living, such as paying for a grandchild’s school fees out of surplus pension income, are often exempt.
The ‘Deprivation of Assets’ Trap
While spending your own money on holidays or cars is perfectly legal, retirees are being warned about the potential impact on future social care funding. If a person requires residential or home care, local authorities conduct a financial assessment to determine how much the individual should contribute.
If an authority believes someone has deliberately spent money or given away assets to avoid paying for care, they can invoke the “deprivation of assets” rule. In such cases, the council may assess the person as if they still had that money. This can leave a pensioner unable to afford their preferred care home or force family members to bridge the financial gap. There is no set time limit on how far back a council can look, though they generally focus on transactions made when a person’s need for care was foreseeable.
