Interactive Investor

Grandparental giving: sharing your wealth and seeing the benefits

18th April 2023 09:00

by Shona Lowe from abrdn

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Find out how sharing your wealth during your lifetime can really make a difference, and bring you joy.

Grandfather with grandchildren 600

With many of us living longer, you may be thinking about how you can support your family at the moments that matter. Sharing your wealth during your lifetime – especially with younger generations facing the pressures of rising house prices and university fees – can really make a difference and bring you great joy too.

While gifts to grandchildren can cover anything from pocket money to driving lessons, the big strains are education and housing.

Students can build up large debts, so it could be a great idea to plan ahead and try to take some of the financial pressure off what should be one of the most exciting times in a young person’s life.

And today’s first-time buyers can expect to need a large deposit to enable them to buy a property.

The good news is that there are different ways to share your wealth that can cover a whole range of objectives and some have tax benefits.

What do your grandchildren need and when do they need it?

There’s a simple starting point after you’ve worked out what you can afford to give. What is it that your grandchildren actually need and when do they need it?

The best way to make gifts to your grandchildren will be different depending on:

  1. How old they are, and
  2. If you have concerns about handing over large sums at a young and impressionable age.

But making a gift at the earliest possible time means that any potential investment growth can play a big part in meeting a future cost.

Younger grandchildren

1) Junior ISA (JISA)

If your grandchild is under age 18, one option is to save into their JISA. While you can’t open one on their behalf, you can pay into it within their annual limit, which is £9,000 for the 2023-24 tax year.

One advantage of a JISA is that they can’t dip into it until they reach 18 – but it is theirs to spend how they want to after that.

The money can be deposited in a cash ISA or invested in a stocks and shares ISA, or both. Any investment growth in a stocks and shares ISA is tax efficient, while interest from a cash ISA is tax free.

If you put money aside for 18 years, it could build into a considerable sum, though with any investment the value can go down as well as up.

2) Child’s bank account

Alternatively, for smaller gifts a child’s bank account is practical and easy for family and friends to pay money into. And giving younger children access to their savings can help them manage their own money. However, bear in mind that interest rates for savers remain fairly low, despite recent increases.

Older grandchildren

If your grandchild is 18 or older, a Lifetime ISA (LISA) could help them save for their first property.

They can open a LISA between the age of 18 and 40 and you can contribute to it – up to £4,000 a year, which gets a 25% government bonus on top. There are a number of qualifying conditions, which you can read about on But any money that isn’t used to get a foothold on the property ladder can also be spent when they are much older at age 60 to top up their pension savings.

Would you like the reassurance of some control?

Understandably, you may be concerned about giving your grandchildren too much too soon. You may want to have some control over where money is saved or invested, and when it’s handed over. Making a gift into trust could ease the fears of giving large sums to grandchildren before they have sufficient financial maturity and give you the control you want.

As a trustee, you can retain an element of control over the money, and how and when it’s paid out. Plus, gifts made to the trust can reduce your estate for inheritance tax.

You can read more on the different types of trusts available on But this is complex and you should get financial advice.

Is inheritance tax a concern?

Giving money to your grandchildren may have an impact on how your estate is taxed. If inheritance tax is a concern, you can find more information on, or in our previous article Tips on gifting and inheritance tax.

Plan ahead for a brighter future for all

With a bit of careful thought and forward planning now there’s a lot you can do to make sure that the money you give goes as far as it can towards setting your grandchildren up for a brighter future – while you’re still able to enjoy it alongside them.

These are just a few potential options to consider but they won’t be suitable for everyone. What’s right for you will depend on your own individual circumstances. Laws and tax rules may change. The value of tax benefits will depend upon individual circumstances. If you’re unsure about the best approach for you, it’s a good idea to get advice to make sure you’re gifting in the most tax-efficient way.

Get advice

ii/interactive investor joined abrdn in May 2022, which means it benefits from being part of a global investment business that helps customers plan, save and invest for their future.

abrdn offers a wide range of financial advice and planning services. Find out more about how abrdn can help you share your wealth and pass money on to those you care about in a tax-efficient way. Or book your free, no-obligation call today.

The information in this blog should not be regarded as financial advice. If you’re in any doubt about your options, you may wish to speak to a financial adviser. There will likely be a cost for this. All information is based on our understanding in March 2023.

abrdn accepts no responsibility for information on external websites. These are provided for general information.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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Please remember, investment value can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

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