Opening a Savings Account For Your Grandchild UK




Grandparent-child relationships can be special and often, grandparents want to invest in their grandchildren’s future. One way of doing this is by opening a savings account for your grandchild.

Children have several savings accounts to choose from, typically allowing both parents or grandparents (or another legal guardian) to determine when their child can access the money.

Regular Savings Account

There are many ways to help your grandchildren prepare for their future. One of the best is opening a savings account specifically tailored towards them.

Regular savings accounts encourage people to set aside a small amount of money each month, instead of throwing it away when they have extra cash. These accounts typically come with limits and conditions – though these may differ from bank to bank.

Some financial products offer fixed term periods of 12 months, while others feature variable terms that permit withdrawals at any time with reduced interest rates.

When opening a regular savings account for your grandchild, be sure to carefully evaluate all available options and decide which is best suited for them. It’s also essential that you consider how the funds will be used and who owns them; this will determine how easily your grandchildren can access them in the future.

Junior ISA

A Junior ISA is the ideal way for your grandchild to build up their savings and become financially independent. Anyone can open and manage a Junior ISA as long as the total contributions do not exceed the annual allowance (PS9,000 in 2022/23 tax year).

As an investment option, investors have two choices: cash Junior ISA or Stocks and Shares Junior ISA. Both offer tax-exempt savings with no personal income or capital gains taxes on any growth generated.

Stocks and shares Junior ISAs can be more volatile than cash ones due to market changes, so if you’re uncertain which is best for your child, seek professional advice.

If you’re searching for a more secure way to save, a junior self-invested personal pension (SIPP) could be an excellent option. Saving into a SIPP is especially beneficial for grandparents as it allows them to plan their retirement years and even includes tax top-up – meaning that for every PS1 invested, the government will add another 25p on top.

Premium Bonds

Grandparents often opt to open savings accounts for their grandchildren. Not only does this give the child some financial security in the future, but it may also reduce inheritance tax obligations.

However, it’s essential to remember that savings accounts do not guarantee an interest rate and inflation is rising rapidly. Therefore, well-meaning grandparents might do better by opening other types of savings accounts instead.

Premium Bonds have been a beloved saving choice of the nation since 1956 and offer an extra advantage over traditional savings: every month you could win tax-free prizes of up to one million pounds!

Grandparents may purchase bonds for children under 16 for between PS25 and PS50,000. The application form must be filled out jointly by both a parent or legal guardian and the grandchild, and NS&I will verify everyone’s identity within seven to 10 days.

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