Is Gifting Money the Best Christmas Present This Year?

Investing in a financial gift can provide your children and grandchildren with a useful nest egg for their future – and might even encourage them to start the savings habit themselves.

With Christmas just around the corner, many people are rethinking the kinds of gifts that will genuinely help their loved ones — especially adult children and grandchildren feeling the squeeze from ongoing living-cost pressures. For many families, a financial gift can be far more meaningful (and practical) than another wrapped present under the tree.

But beyond helping younger generations, gifting can also play a powerful role in your own long-term estate planning — provided you’re clear on the rules and confident about affordability.

Here’s everything you need to know before making a Christmas gift this year.

Why money might be more welcome than ever

A cash gift can do two things:

• Give your loved ones a boost — whether that’s help with bills, rent, university costs or saving for a first home.
• Support your inheritance tax planning — gifting during your lifetime can reduce the value of your estate, and therefore your future IHT exposure.

Of course, if you’re feeling particularly generous, it’s worth checking how any larger gifts might affect your own financial resilience in later life. But with the right guidance, gifting can be both kind and tax-efficient.

Some options for your children and grandchildren

You have a lot of options to consider, from Premium Bonds to savings accounts, investments and pensions. Here’s a look at some of the more popular ones.

Junior ISA (JISA)

A JISA remains one of the most tax-efficient ways to build a future nest egg for a child.

• 2025/26 allowance: £9,000
• Money grows tax-free
• Anyone can contribute once the account is open
• Child gains full access at age 18
• From age 16, they can control the account (but still cannot withdraw)

If your aim is to support future education, property deposits or long-term financial security, a JISA is often the best place to start.

Children’s savings accounts

If you want more flexibility — including the ability to access the money yourself — a simple children’s savings account may be more suitable. These don’t offer the same tax advantages, but they’re more straightforward and accessible.

Pension for a child

For the ultimate long-term legacy, you can contribute to a child’s pension.

• 2025/26 annual limit: £2,880 net (£3,600 after HMRC adds basic-rate tax relief)
• Money is locked away until pension age, giving decades of potential growth
• Only a parent or guardian can set up the plan, but anyone can contribute

This is rarely the “fun” Christmas gift — but in terms of long-term value, it’s one of the most powerful.

Supporting those in their 20s and 30s

For young adults, the late 20s and early 30s can be a financial pressure point. Mortgage payments, rising rents, car costs, childcare fees — the list adds up quickly.

A thoughtful financial gift can ease the pressure and help them stay on track with long-term goals.

A lump sum could help them:

• Make home improvements
• Build a deposit for a property
• Clear high-interest debt

Regular support could contribute to:

• Monthly rent or mortgage payments
• Nursery or school fees
• Savings, investments or pension contributions

Relieving even a portion of their monthly outgoings could create breathing room that supports their broader financial wellbeing.

Talking openly with loved ones over 40 about the help they need

If your children are in their 40s, they may be part of the “sandwich generation” — juggling the costs of raising children while also supporting ageing parents. Even high earners can find this stage financially demanding.

At this point, there’s no single “right” way to help. Instead, a simple conversation can reveal what support would genuinely make a difference.

Your help might go towards:

• Increasing pension contributions
• Clearing debt
• Supporting school or university fees
• Bolstering savings or investments

Sometimes the most valuable gift is clarity around what would help most.

Do these gifts fit into your long-term plan?

Generosity is wonderful — but only if it doesn’t leave you exposed financially in the years ahead.  Whatever you plan to do and at what level, understanding the current UK gifting allowances makes sense.

Also, before making any substantial gift, consider:

• Can I comfortably afford to give this away?
• Will this affect my retirement income or potential future care costs?
• Am I using the most tax-efficient allowances available?
• Should this form part of a wider estate-planning approach?

A financial planner can help you explore the options, model different scenarios, and clarify what’s safe and sustainable.

How we can help

If you’re planning to make financial gifts — whether one-off or regular — it makes sense to speak with a Kellands financial planner first.

We can help you:

• Understand which gifting allowances are available
• Build a strategy that supports both generosity and long-term financial security
• Explore the best options for children’s long-term savings
• Ensure your estate plan remains on track
• Discuss plans with the recipient if you’d like them involved

Thoughtful, well-planned gifting can support your loved ones today and reduce your estate’s future tax burden. With the right advice, both can work hand-in-hand.

Please note

This article is for general information only and does not constitute advice.

The Financial Conduct Authority does not regulate estate planning or tax planning.

This article does not constitute tax, legal or financial advice and should not be relied upon as such.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

The value of your investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

< back to News & Views