Planning for your children or grandchildren this tax year

One of the most powerful advantages younger generations have is time. Even relatively small contributions can build into something more substantial when invested over many years. Starting early can also give you more flexibility, rather than feeling rushed to make large gifts later in life.

That said, any decisions should sit comfortably alongside your own plans. Your income needs, retirement goals, and potential care costs should always come first. Helping others should feel rewarding, not restrictive.

For children, a Junior ISA can be a straightforward way to save. Friends and family can contribute up to the annual allowance, which is currently £9,000, and any growth or income is free from income tax and capital gains tax. The account is held in the child’s name and becomes theirs to control at age 18, which is worth bearing in mind when deciding how much to contribute.

Another option some grandparents consider is a pension for a child. Although it may feel very early, pensions benefit hugely from long investment horizons. Anyone can contribute up to £2,880 a year, which is topped up by basic rate tax relief to £3,600. The money is locked away until later life, but that can be a benefit if you want to ringfence funds strictly for the future.

Remember, that while investing can help grow money over the long term, values can move both up and down, and outcomes aren’t guaranteed. In some cases, you may not receive back the full amount invested. Choosing the right approach depends on your objectives, time horizon, and attitude to risk.

Regular or one‑off gifts could help children or grandchildren at key moments, such as university, buying a home, or starting a business. From a tax perspective, there are a few inheritance tax exemptions that can help.

You can give away up to £3,000 each tax year and this amount falls outside your estate immediately. Smaller gifts of up to £250 per person are also permitted, provided they are not part of the £3,000 allowance.

In some cases, larger gifts made from surplus income can also fall outside your estate, as long as they do not affect your standard of living and are made regularly. Good record‑keeping is essential here, as evidence may be needed in the future.

Larger gifts that do not meet these conditions may still reduce inheritance tax if you survive for seven years after making them. Planning ahead can give you more options and reduce uncertainty for your family.

Tax treatment depends on individual circumstances and rules can change, so it is important not to make assumptions about how gifts will be taxed.

Some families are keen to help but worry about handing over too much responsibility too soon. In these situations, trusts could offer more oversight and structure. They can also help align gifts with your intentions, for example supporting education or providing longer‑term financial stability.

These arrangements can be more complex and are not right for everyone, but they can be useful where larger sums or family dynamics are involved.

Financial help does not have to be just about money. Many families find value in involving children or grandchildren in age‑appropriate conversations about saving, spending and investing. This can help build confidence and understanding over time.

A thoughtful gift, paired with an explanation of why you chose it and how it works, can be just as valuable as the financial support itself.

Circumstances change. So do tax rules, investment markets and family needs. What felt right a few years ago may need adjusting. Reviewing plans regularly helps ensure your support remains aligned with both your goals and those of your family.

Professional financial advice can help bring all of this together, looking at how gifts and savings fit alongside your wider financial plan. An adviser can help you weigh up the options, understand the risks, and make informed decisions that feel right for you and your family.

There’s no cost to meet with one of our advisers or to talk through your goals. You’ll only pay a fee if you decide to go ahead with the recommendations in your personalised financial plan. There’s no obligation to proceed, and if you do, your adviser will explain all costs clearly before you make any decisions.

Planning for your children or grandchildren is often about balancing generosity with reassurance. With careful thought and the right advice, the new tax year can be a good time to take steps that support the next generation while keeping your own financial wellbeing firmly on track.

This article is for information purposes only. It is not intended as investment advice.

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