Savvy singers and songwriters can generate an annual income by releasing a Christmas hit. As you shop for loved ones, consider giving a gift that will continue to give value over time.

Many Christmas songs are replayed every year. Indeed, songs you’ve listened to this year can evoke nostalgic childhood Christmas memories. For the artists behind the tracks, a Christmas hit provides an income boost over the festive period.

According to The Standard (19.12.2024), Mariah Carey’s 1994 hit ‘All I Want For Christmas Is You’ brings in around $3 million (£2.28 million) a year. Similarly, Canadian newspaper Times Colonist (26.12.2024) suggests Michael Bublé could earn as much as $6 million (£4.56 million) during the festive season from two songs – ‘Holly Jolly Christmas’ and ‘It’s Beginning to Look a Lot Like Christmas’.

Despite being released years ago, these singles continue to make money for the artists.

While you’re browsing festive perfume sets or the latest gadgets, you may want to consider how you could offer a gift that will do the same for your loved ones.

Of course, singers can’t guarantee that their tune will be a hit the year it comes out, let alone decades later. Similarly, it’s impossible to know exactly what’s around the corner and guarantee how your gift might grow in the coming years. It’s important to weigh up the different options, understand the potential risks, and assess what’s right for you and the recipient.

3 ways you can gift wealth to support life goals  

1. Deposit money into a savings account

One of the simplest ways for your gift to increase is to deposit the money into a savings account, where it will earn interest.

This could be a great option if you want to improve the financial security of your loved one by creating a buffer or helping them reach short-term savings goals.

Keep in mind that interest rates might not keep pace with inflation, which could lead to the value of savings falling in real terms over the long term. Speaking to your loved one about how they intend to use the money could help you identify if a savings account is the best place for it.

2. Contribute to an investment portfolio

If your loved one is working towards a long-term savings goal, investing the gift might be an option you want to explore.

Investments provide an opportunity for your initial gift to grow at a faster pace than inflation and increase in real terms over a long period. However, volatility and risk are part of investing, and returns cannot be guaranteed.

Be sure to speak to your loved one about why they’re saving and their current financial circumstances to assess if investing the gift is the right option.

3. Add money to your loved one’s pension

Finally, you could aid your loved one’s retirement dream by adding money to their pension.

A pension provides a tax-efficient way to invest as the returns aren’t liable for Capital Gains Tax. Instead, the pension holder may pay Income Tax on withdrawals. With many workers struggling to balance short- and long-term goals, a pension boost could ease some of their concerns about security in retirement.

You should note you cannot usually access the money held in a pension until you turn 55 (rising to 57 in 2028). As a result, be sure that your recipient wants to use the gift to support their retirement.

Gifting assets could make sense from an Inheritance Tax planning perspective

If your estate could be liable for Inheritance Tax (IHT), gifting your assets during your lifetime might be tax-efficient.

In 2025/26, the nil-rate band is £325,000, and if the total value of your estate is below this threshold, no IHT will be due. In addition, your estate can use the residence nil-rate band, which is £175,000 in 2025/26, if you leave your main home to children or grandchildren.

You can pass on unused allowances to your spouse or civil partner. In effect, this means couples can leave behind up to £1 million before IHT is due, when planning together.

The portion of your estate that exceeds IHT thresholds will usually be taxed at 40%, so this could significantly reduce how much you leave behind for loved ones.

As a result, some people choose to gift assets during their lifetime to reduce the value of their estate. However, this isn’t as straightforward as it first seems. Not all gifts are considered immediately outside of your estate for IHT purposes.

So, working with a financial planner to make gifting part of your estate plan could help you pass on your assets tax-efficiently.

Contact us to discuss gifting

While gifting might be associated with the festive season, you can make it part of your wider financial plan too. Please get in touch to talk about how you’d like to pass on your wealth and ways to do so tax-efficiently.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

The Financial Conduct Authority does not regulate tax planning or Inheritance Tax planning.