Gifting Money To Children Tax Efficiently

Gifting Money To Children Tax EfficientlyWritten on September 29, 2026 by Kirk Rice LLP

Many grandparents and parents want to help their descendants financially, whether for education, a first home, or their long-term future. The good news is that there are several tax-efficient ways to gift money, depending on your circumstances and objectives.

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 £9,000 into a Junior ISA.
Choose investments wisely for each based on when they might be needing the money.

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

If larger sums of money are available:

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.

 A trust will reduce inheritance tax when your death occurs more than 7 years after it is set up.

If you have surplus income then you should consider keeping sufficient records and meeting the HMRC conditions for the money gifted to be ignored when assessing inheritance tax even if you die within 7 years.

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.

Get in touch

Gifting can play an important role in passing wealth to future generations but the tax rules can be complex. If you’d like advice on gifting strategies, trusts, or inheritance tax planning, contact us at info@kirkrice.co.uk.

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Please note: This article was correct at the time of publication. It is intended for general information only and should not be relied upon as professional advice. Specific advice should always be obtained based on your individual circumstances.

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