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Investing for grandchildren

Investing for Grandchildren

Important information - 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. This is not personal advice. If you are unsure if an investment is right for you or your grandchild, please seek advice.

Why invest for grandchildren

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.

How to start investing for your grandchild

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.


Free from UK income and capital gains taxes.

Once a parent or guardian opens a Junior ISA, grandparents can make contributions up to the annual limit (for the 2020/2021 tax year) of £9,000 (in total) is reached. The account converts to an adult ISA at age 18.

Junior ISA top ups can be made online, by post or by telephone as a lump sum or via monthly savings.

Find out more

Top up an existing account

Junior SIPP (Child’s pension)

Free from UK income and capital gains taxes.

Once opened by a parent or legal guardian, grandparents can make lump sum contributions by cheque or by telephone using a debit card.

The account 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

Top up an existing account

Junior Investment Account

This 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.

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Minimising Tax

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

Why choose HL for your grandchild's investments?

  • Security - we're a FTSE 100 company, trusted by over one million clients
  • Care - if you ever need a hand, we answer our calls in just 20 seconds*
  • Ease - check your investments anytime online or with the HL app
  • Expertise - investment ideas from our expert analysts
  • Award-winning - we've won over 200 awards, including Best Online Investment Provider at the Boring Money Consumer Investment Awards

*Average Aug-Oct 2019