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Kirk Rice Blog

Gifting Money To Children Tax EfficientlyWritten on November 14, 2019 by Kirk Rice LLP

Gifting Money To Children Tax Efficiently
Financial Services Questions

The Question:

Is there a way of gifting money to my grandchildren (under 16 years old) tax efficiently this Christmas?

Kirk Rice LLP answers:

Two ideas of how gifting money to children tax efficiently is possible are:

  • Pay up to £2,880 into a personal pension plan for them and the government will add up to £720 immediately.
  • Pay up to £4,368 into a Junior ISA. When they are age 18, they could use some of the money to open a Lifetime ISA. The government will add 25% to the value of the Lifetime ISA when they buy their first home.

Check the conditions for each of these ideas before proceeding, a good place to start is with the following articles from the money advice service from the government:

Another option you might consider:

  • Set up a family trust with your money. You can retain control during your lifetime and decide who else will have control when you no longer wish to or are unable to. Invest for the future needs of your grandchildren. If you are the trustees, you’ll decide when to use the money, but if it will be several years before they need the money, it should be managed in investments to ensure it has the best opportunity to grow.

Do you need help with your Self Assessment Tax Return?

With Christmas just around the corner, the 31st January 2020 will be here sooner than we think. Make sure you don't leave it too late and incur a minimum of £100 penalty


If your death occurs at least 7 years after creating the trust, the value given will not be liable to inheritance tax. A trust will ensure inheritance tax is reduced when your deaths occur more than 7 years after it is set up.

Inheritance tax for gifting money has many rules, but fortunately, there are tried and tested solutions to manage wealth for the benefit of future generations. Please speak to an experienced adviser, for further thoughts on what actions may be appropriate, considering your circumstances and wishes.

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Any reader interested in finding out more about the gifting money to children tax efficiently should email info@kirkrice.co.uk to arrange a call with one of our financial planners.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. The FCA does not regulate tax and trust advice.