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Leaving a Lasting Legacy


One of the questions we get a lot is what’s the best way for grandparents to help their grandchildren financially. There’s two key drivers at play here – minimising tax and maximising growth.

Stakeholder Pension

Every child in the UK is entitled to a stakeholder pension of £3,600 a year. That’s £2,880 net contributions, topped up with income tax relief. In other words, the government will pay them £720 a year. Just like your own pension – the child can’t touch the money until they’re at retirement age, but it can be invested as you wish, and all growth will be tax free.

A Lasting Legacy

As you might imagine, even on a modest contribution, 58 years of compound interest will go a long way. For example, if you were to contribute their entire stakeholder allowance of £3,600 for 18 years, the fund could reach around £640,000 at maturity. That’s after just £50,000 or so of net contributions. This intergenerational planning can also help reduce any potential inheritance tax liability.

No matter how much you can afford to gift, by investing early and using your allowances effectively, you can maximise your impact and leave a legacy that will be remembered for generations. That beats a bench, surely?

To find out more about how you can pass on family wealth efficiently, talk to us today.

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