5 smart ways to help your children and grandchildren financially

As schools reopen and summer holidays come to an end, September can be a natural time to think about the younger people in your family. If you spent time with children or grandchildren this summer, you may be wondering how best to support their future. Here are five ways to help them financially, without putting your own plans at risk.

Estimated read time: 4 minutes

September often feels like a reset. The school bags are packed, summer holidays are over, and family routines start to return to normal.

If you have children or grandchildren, the end of summer may also leave you thinking about the part you play in their lives. Time together can be a lovely reminder of how quickly they are growing up, and how much you may want to help them feel more secure, confident and prepared for the future.

Younger generations face an increasingly challenging economic environment, from rising house prices and higher living costs to the pressure of saving for the future while managing today’s bills. It is understandable if you want to step in and help where you can.

Before offering financial help, though, it is worth thinking carefully about the most effective way to do it. Giving money directly can be helpful, but it is not always the most tax-efficient route, and it may not always be the best fit for your own financial security.

A little planning can help you support the people you love in a way that feels generous, practical and sustainable. Read on to discover five smart ways to financially support your children or grandchildren.

1. Make use of Junior ISAs for younger children
A Junior ISA can be a simple, tax-efficient way to save for a child under 18. The account is held in their name, and any returns or withdrawals are tax-free. In the 2026/27 tax year, up to £9,000 can be paid into a Junior ISA for each child.

You can choose between a cash Junior ISA and a stocks and shares Junior ISA. Cash may feel more suitable if the child is close to 18, while investing may be worth considering for longer timeframes. You do not have to choose one or the other. You could open both and split the allowance in a way that suits the child’s age, timescale and needs.

The money could help with university costs, a first car, early career expenses or even a future home deposit. Just remember that the child can usually take control of the account at 16 and access the money at 18, so it is worth thinking about how comfortable you feel with them making their own decisions at that point.

2. Contribute to their pension
Retirement may feel a long way off for younger adults, especially if they are focused on saving for a first home or managing everyday costs. However, pension contributions made early can have many years to grow, which could make a meaningful difference later in life.

Research from the Money and Pensions Service found that 29% of working 18- to 25-year-olds had never contributed to a workplace or private pension. If you’re able to help, you can contribute to another adult’s pension, and they should still receive tax relief on contributions within the rules.

For 2026/27, the standard Annual Allowance is £60,000, although personal contributions are also limited by relevant UK earnings. Some people, including high earners or those who have already accessed pension benefits flexibly, may have a lower allowance.

You can also contribute to a child’s pension. If they have little or no earnings, contributions of up to £2,880 a year can usually receive basic-rate tax relief, bringing the total invested to £3,600.

The main drawback is access. Pension money is locked away until much later in life so this is better suited to long-term security than short-term help. Used alongside other savings, though, it could give your child or grandchild a valuable head start.

3. Help older children save for a first home with a Lifetime ISA
Buying a first home can feel out of reach for many younger adults, so it is no surprise that family support is becoming more common. If you want to help with a deposit, a Lifetime ISA may be one option to explore.

For adult children or grandchildren aged 18 to 39, a Lifetime ISA can be used to save for a first home. They can contribute up to £4,000 a year and the government adds a 25% bonus, worth up to £1,000 a year.

You cannot pay directly into someone else’s Lifetime ISA, but you may be able to gift money so they can make the contribution themselves. The rules are important: a Lifetime ISA is generally designed for buying a first home worth up to £450,000 or for later-life savings from age 60. Other withdrawals can trigger a penalty, so it may not be suitable for money they need at short notice.

If you are helping with a house deposit more directly, it is worth being clear from the start about whether the support is a gift or a loan. Mortgage lenders may ask for evidence, and agreeing expectations early can help avoid misunderstandings later.

4. Give financial gifts
Gifting money can be one of the simplest ways to support your children or grandchildren during your lifetime. Done carefully, it may also help reduce the value of your estate for inheritance tax purposes.

The wider inheritance tax picture is changing. Frozen thresholds, rising asset values and the planned inclusion of most unused pensions within estates from April 2027 mean more families may find themselves affected than expected. That does not mean you need to rush into giving money away, but it does make regular reviews more important.

You can usually give away up to £3,000 per tax year using the annual exemption. If the previous year’s exemption was unused, you may be able to carry it forward for one year. Small gifts, wedding gifts and regular gifts from surplus income may also be useful in the right circumstances.

Larger gifts may fall outside your estate if you survive seven years from the date of the gift, but the rules can be complex. Keeping clear records can also make things easier for your family later, especially if you make regular gifts from income.

5. Set up a trust
A trust is a legal arrangement that lets you set money or other assets aside for a child or grandchild to use in the future.

One of the main benefits is control. You can decide who the money is for, who looks after it, and when the child or grandchild may be able to access it. For example, you may want them to receive the money when they reach a certain age, rather than as soon as they turn 18.

Trusts can also be useful as part of inheritance tax planning, although the rules are detailed and depend on the type of trust you use. It is important to take advice before setting one up, so you understand the tax position, the costs and the responsibilities involved.

Wanting to help your children or grandchildren is natural. The best approach will depend on their age, your aims, your family’s circumstances and what you need for your own future.

If you are thinking about giving financial support, we can help you look at the options carefully, understand the tax and planning implications, and make sure any help you offer fits comfortably within your own financial plan.

FAQs

What is the best way to save for a child or grandchild?
There is no single best option. A Junior ISA may suit money intended for early adulthood, while a pension is designed for much longer-term retirement savings. The right choice depends on when the money may be needed, how much control you want, and the level of investment risk you are comfortable with.

Can grandparents pay into a Junior ISA?
A parent or guardian usually needs to open and manage the Junior ISA, but grandparents and other family members can normally contribute, if the total paid in does not exceed the annual Junior ISA allowance.

Can I give money to my children without inheritance tax?
There are several inheritance tax exemptions that may apply, including the annual exemption, small gifts, wedding gifts and regular gifts from surplus income. Larger gifts may fall outside your estate if you survive seven years, but it is important to take advice and keep good records.

Should I help my family if I am already retired?
You may still be able to help, but it is especially important to check that any gifts will not affect your own income, lifestyle, care options or emergency funds. A financial plan can help you see what is affordable before you make decisions.

Disclaimer: Information is based on publicly available data and government announcements at the time of writing (September 2026) and may be subject to change.

Risk warnings: This content is for information only. It is not personal financial advice – please speak with us, or another qualified adviser, before making decisions about your pension. The value of your pension can go down as well as up, and you could get back less than has been paid in. You can usually only access money in a pension from age 55, rising to 57 from April 2028, unless your plan has a protected pension age. Tax treatment depends on your individual circumstances and may change in the future. The value of your investments can go down as well as up, so you could get back less than you invested. The Financial Conduct Authority does not regulate estate planning, tax advice, or trusts

5 smart ways to help your children and grandchildren financially

Dafferns Wealth

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