Supporting grandchildren in uncertain times

Inheritance and estate planning
Insights

Your grandchildren could face significant financial challenges in an uncertain economic environment.

7 June 2024 | 3 minute read

University tuition fees have topped £9,250 a year1, and the average UK house price stood at £282,776 in March 2024 – that’s 57% higher than a decade ago2. Coupled with the rising cost of living, it has become increasingly difficult for today’s young people to save and invest for the future.

   


 
     
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If you are looking for ways to support your grandchildren, these are some of the steps you could consider.

Save into a Junior ISA

If your grandchildren are still young, investing into a Junior ISA (JISA) is a great way of building up money for their future. You can invest up to £9,000 into a JISA in the 2024/25 tax year and dividends and growth are tax free. While only parents or legal guardians can open a Junior ISA, anyone can contribute – be they grandparents, godparents, or family friends.

The child can access money in a JISA at age 18, using this however they wish – perhaps towards university costs, or building a property deposit.

   


 
     
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Make use of bare trusts

If you hold assets on behalf of a child in a bare trust there are no investment limits, and money can be used at any time for the child’s benefit, such as towards school fees.

Gains or income on investments held in a bare trust can typically use the child’s personal tax allowances. The account can remain open beyond the child’s 18th birthday, although at that age they become legally entitled to access the money if they wish.

Pay into a junior pension

If you would like to give your grandchild a head start for retirement saving, a junior pension is an attractive option. You can save up to £2,880 a year – boosted by tax relief from the government to a maximum of £3,600 a year. Anyone can invest on behalf of a child into a junior pension, but only a parent or legal guardian can open the account.

Make a gift count

For older children who have more immediate financial needs, you may wish to consider gifting some of your wealth. Each year you can give away up to £3,000 which will not be subject to inheritance tax (IHT) when you die. You can also give £250 to any number of people each year, free from IHT.

It is possible to make larger financial gifts – known as ‘potentially exempt transfers’ – but you must survive for at least seven years after making the gift for it to be tax free. The rules around tax-efficient gifts are complex, so make sure you seek professional advice.

Next steps

It can be tricky knowing when and how to give money to your family alongside securing your own financial future, and that’s where getting some financial advice can help. A financial adviser can build a tailormade plan that helps you and your family build the financial security you need today and in the future.


   


 
     
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