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Investing for grandchildren

Investing for grandchildren

Tax-efficient investments for eligible children
Important: the value of tax savings depends on individual circumstances and tax rules can change over time. Investments can go down in value as well as up, so a child could get back less than invested. A Junior SIPP is a type of pension for people happy to make their own investment decisions, and is not accessible until age 55 which is likely to rise by the time a child reaches retirement. If you are unsure if an investment is right for you or your grandchild, please seek advice.

Grandparents are often keen to contribute to grandchildren's savings as a way of rolling wealth down the generations and saving tax.

Cash may seem like the safest option with guaranteed returns but there is a risk that interest will not keep up with inflation. A child will not lose money, but they may be able to buy less with the fund in future than they could today.

Stock market investments have historically outperformed cash over the long term but are riskier – they will fall as well as rise in value and a child could get back less than invested. Past performance should not be seen as a guide to how investments might perform in future.

Ways to invest for grandchildren

Most accounts for children must be opened by a parent or legal guardian, but there are exceptions. We offer three junior accounts that grandparents can pay into, one of which they can also manage on a child’s behalf.

  • Junior ISA
    Free from UK income and capital gains taxes. Once opened by a parent or legal guardian, anybody can contribute, until the annual savings limit of £4,128 (in total) is reached. Converts to an adult ISA at age 18. Find out more.
  • Junior SIPP (child’s pension)
    Free from UK income and capital gains taxes. Opened by a parent or legal guardian, but anybody can contribute. Benefits from 20% tax relief on contributions up to the annual limit, so a gross contribution of £3,600 (the maximum for most children) only costs £2,880. Find out more.
  • Junior Investment Account
    Can be opened by a grandparent. Assets are held ‘in trust’ for a child until they turn 18, although earlier withdrawals are possible if they are used for the benefit of the child, and are normally taxed as if they belong to the child. Can be useful for inheritance tax (IHT) planning. Find out more.

Find out more about our investment accounts for children

When money or assets are paid into an account for someone else's benefit (such as a child’s), this is treated as a gift. Some gifts are (or may become) free or exempt from inheritance tax, others may be subject to it. Remember tax rules can change over time, and the value of benefits will depend on the child's circumstances.

Find out more about minimising tax

How to get started

Junior ISA

Accounts must be opened by a parent or guardian. Parents can open a Junior ISA without subscribing any cash if the funds are coming later (within 30 days) from a third party such as a grandparent. Alternatively parents can complete a paper application form to open a Junior ISA accompanied with a cheque from a grandparent.

Once a parent or guardian opens a Junior ISA, friends or family can make contributions up to the annual limit. Junior ISA top ups can be made online, by post or by telephone as a lump sum or via monthly savings.

Top up an existing Junior ISA account

Junior SIPP

Accounts must be opened by a parent or guardian. If the child is over 16 they will need to sign the Junior SIPP application, otherwise it will need to be signed by the child's legal guardian. In both cases the legal guardian form will also need to be completed.

After the Junior SIPP has been opened grandparents can make lump sum contributions by cheque or by telephone.

Top up an existing Junior SIPP account

Junior Investment Account

The account will be set up as a bare trust. Grandparents can easily open a Junior Investment Account and set up a bare trust by completing the application and Election for Bare Trust forms. They (or anyone else) can choose to make a lump sum payment, and also set up a direct debit for regular monthly payments into the account.

Open a Junior Investment Account


    • Easy access to all the family accounts
      Link your grandchild’s account to your own to manage their account online or via our app, and see all your family investments in one place.
    • Great value and a wide choice
      Make the most of the free research, articles, tools and insight from our team of investment experts. Investors can choose ready-made portfolios or from a range of over 2,500 funds, shares and more.
    • Award-wining service
      We’ve been helping investors and their families save time, tax and money on their investments for over 35 years. We continue to win awards for our products and services, and are committed to providing an unrivalled client experience for years to come.