Why More Families are Downsizing in 2026 - Guest Blog From John Kirkwood of Quilter Financial Advisers
Why More Families are Downsizing in 2026 - Guest Blog From John Kirkwood of Quilter Financial Advisers
From gifting to IHT - what you should know first
More families are choosing to downsize in 2026, driven by a mix of financial, lifestyle and tax considerations. Rising living costs, the desire to release capital, and growing interest in helping children onto the property ladder are all playing a part. At the same time, upcoming changes to high value property taxation are prompting some homeowners to reassess whether their current home still fits their long term plans.
Inheritance Tax considerations
Inheritance Tax continues to affect more families each year, with receipts reaching record levels and pro
jected to rise further as more estates fall into scope. Upcoming changes from April 2027 will also bring unused pension funds into the IHT net, meaning beneficiaries may face tax on inherited pension wealth. For anyone considering downsizing, reviewing how property, pensions and gifts fit together has never been more important.
Scotland’s new high value council tax bands
From April 2028, the Scottish government plans to introduce two new council tax bands for higher value homes. Band I will apply to properties valued between £1 million and £2 million, while Band J will cover homes worth over £2 million. Although this affects a small proportion of Scottish households, it has prompted some owners of larger properties to think about their long term plans and whether downsizing might make sense.
Gifting, the 7 year rule and planning options
For many families, downsizing isn’t just about reducing running costs, it’s also a way to release capital to support children earlier in life. Whether it’s helping with a deposit or passing on wealth while it’s most useful, gifts made from the proceeds of a sale can play an important role in inter generational planning. Most lifetime gifts fall under the “7 year rule”, becoming exempt from Inheritance Tax if you survive seven years. If death occurs sooner, taper relief may reduce the tax due. In some cases, trusts can help manage how and when money is passed on, though they add complexity and aren’t always necessary. Thinking about these elements early helps ensure gifts, property decisions and estate planning all work together smoothly.
Practical tips before downsizing
Timing can make a real difference when selling. Research from Rightmove shows that the first quarter of the year is often the strongest period for securing a buyer, with February seeing the highest success rate. Realistic pricing, good presentation and strong photography also help homes sell faster, while being organised and ready to move can keep the process smooth once an offer is agreed.
A bit of early thinking about how property, family plans and tax interact can make future decisions feel far more straightforward.