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Gifting money to a child or grandchild

We explain how to gift money to a child to invest and how this could be taxed

Important information - Unlike the security offered by cash, investments and any income they produce can go down in value as well as up, so your child could get back less than invested. The value of tax savings depends on individual circumstances and tax rules can change over time. Figures and allowances relate to the 2024/2025 tax year unless otherwise specified. If you are unsure if an investment is right for you or your child, please ask for financial advice.

Gifting money to children

We want the best for the children in our lives. We want them to be able to chase their dreams and achieve their ambitions. As adults, how can we help?

If you’re considering giving a child a gift, saving or investing money on their behalf can help build a strong financial future and help give them the best start in life. A gift they will appreciate over the long term.

Why you could consider investing rather than saving

Putting money in a children’s savings account could be an option, but inflation - the change in the purchasing value of money - will eat away at the real value of those savings.

Cash is usually safe for short-term savings, where you need the money in less than 5 years.

But if you have the time to be patient, investing in the stock market could help you beat inflation. It also offers the potential for greater rewards in return for accepting a higher level of risk.

Though remember unlike the security offered by cash, investments and any income they produce can go up and down in value, so your child could get back less than you put in.

Find out more about investing vs saving

Learn more about risk

How to gift money into a child's investment account

We currently offer two junior investment accounts that family and friends can invest into.

These accounts must be opened and managed by a parent or legal guardian, but others including grandparents can also add money to the accounts.

Both offer tax efficiency that may not be available outside of these accounts.

Whichever account you choose, you can be confident it will be easy to manage with HL and there will be a wide investment choice. See how our accounts for children compare.

Tax rules can change, and benefits depend on individual circumstances.

Junior Stocks and Shares ISA

  • Free from UK income and capital gains taxes
  • Once a parent or guardian opens a Junior ISA, anyone can make contributions up to the annual limit of £9,000 (for the 2024/2025 tax year) in total
  • HL Junior ISA top ups can be made online, by post or by telephone as a lump sum or via monthly savings
  • The money can’t normally be accessed until the child turns 18. The account automatically converts to an adult Stocks and Shares ISA at this age

A child is eligible for a Junior ISA if they're a UK resident, under 18 and don't already have a Junior Stocks and Shares ISA or Child Trust Fund.

Junior SIPP (child's pension)

  • Free from UK income and capital gains taxes
  • Once opened by a parent or legal guardian, anyone can make lump sum contributions by cheque or by telephone using a debit card
  • The account benefits from 20% tax relief on personal contributions up to the annual limit, so a gross contribution of £3,600 (the maximum for most children) only costs £2,880
  • The money isn’t normally accessible until at least age 55, which is likely to rise by the time your child reaches retirement

Tax rules when gifting money to a child

There are a few things about tax you should consider before gifting money to a child.

Inheritance tax and gifting

When money or assets are paid into an account (including Junior ISAs, Junior SIPPs) for a child’s benefit, they are treated as a gift. Some gifts are free or exempt from tax, others may be subject to inheritance tax (IHT). Here are some of the exemptions:

Taxation outside of a Junior ISA or Junior SIPP

Both the child’s and person making the gift’s tax positions need to be taken into consideration when investing outside of a Junior ISA or SIPP.

We do not currently offer accounts for children outside of these wrappers.

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Help and support

If you have any questions about investing for children, you can speak to one of our client support experts.

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