Savings For Grandchildren

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Savings For Grandchildren

There are numerous savings accounts and savings plans available to grandparents.

Friendly Societies allow grandparents or friends to start a savings plan for a child.

They provide affordable savings, usually about £25 per month or £270 per year. They offer tax-exempt growth potential, stock market or deposit based investment funds and a tax-free lump sum at the age of 18/21.

Tax-exempty Friendly Society plan

The Government currently restricts the amount that can be invested in a tax-exempt Friendly Society plan. Benefits are payable at the age of 18 or 21 or in the event of death, if that occurs first; and are free of income and capital gains tax. If, however, the policy is cashed in within three quarters of the agreed term or 10 years from the end of the term, whichever is earlier, income tax may sometimes be payable, depending on the child's personal tax circumstances.

• Click here for more information about Friendly Societies.

The Government has recently introduced the Child Trust Fund. Parents, family and friends will also be able to contribute to this fund.

• Click here for more information.