Can I transfer my ISAs to my grandchildren to encourage them to save?

Q. Can I transfer my ISAs to my two adult children or possibly my grandchildren to encourage them to save?

Unfortunately, no. Currently, it’s not possible to transfer ISAs to another individual. When you open an ISA, the tax benefits are solely for the account holder. However, you do have some options.

1. Take advantage of your annual exemption and small gifts allowance

If you have any savings outside your ISAs, you can gift this money to your children and grandchildren.

Each tax year, you can give away a total of £3,000 worth of gifts each tax year, without them being added to the value of your estate. This is also known as your annual exemption.

You can give money up to £3,000 to one person, or, split this figure between several people.

Alternatively, you can gift small gifts of up to £250 per person each year using your regular income. However, you cannot gift this sum to anyone who has received part or all of the £3,000 above.

2. Consider a Junior ISA or Junior SIPP

I understand one of your priorities is to encourage your grandchildren to save. If they don’t already have a Junior ISA or Junior SIPP, it may be worth considering.

As a grandparent, you can’t open a Junior ISA for your grandchildren unless you are their legal guardian. However, parents and legal guardians can open Junior ISAs if their child is under 16. If your grandchildren are aged between 16 and 17, they can open a Junior ISA themselves.

The Junior ISA allowance for the 2024/25 tax year is £9,000. And once your grandchild reaches 18, they can access the money in their Junior ISA. Fidelity doesn’t charge service fees on Junior ISAs, though ongoing fund charges and other fees may apply depending on the choice of investments.

• Learn more about a Junior ISA

The Junior SIPP allowance for the 2024/25 tax year is £3,600 and you have until 5 April 2025 to use it. You can contribute up to £2,880 a year, and the government will add £720 basic tax relief (20%). 

• Learn more about a Junior SIPP

​​​​​​​3. Encourage your grandchildren to save

There’s also value in having conversations with your grandchildren.

According to MoneyHelper, teaching children about money equips them with the knowledge and skills they need to manage their money effectively now, and in the future.¹

Most importantly, children who do better with money tend to have parents/carers who talk to them about money and give them responsibility for spending and saving from an early age.

The way you discuss this with your grandchildren is entirely up to you but here are some ideas you can explore:

1. Give them a piggy bank to save their own money - handling money will help them gain confidence around it. You can let them see and handle coins, notes and credit/debit cards.
    
2. Interactive play for younger children - If your grandchildren are younger, you can put lots of 1p coins and one each of a 2p, 5p, 10p, 20p, 50p, and £1 coin on a flat surface. Build a pile of 1p coins to show your grandchildren the difference in their value. To make things a little more challenging, you can take down the piles and ask them to recreate them.
    
3. Responsibility for money - If you are going out with your grandchildren, you can give them cash in a purse or wallet and ask them to pay for snacks or public transport. If they want something extra, explain they may not have enough in the purse for other things they want to do.
    
4. Help them save for a day out - Ask your grandchildren to help you set a budget for a day out. This may be a big treat or a local outing near home. You can list all the things you want to do and how much it will cost. This can include all the food, drink, and transport costs. To challenge them, you could ask them if they have any ideas on how you may be able to save money on certain aspects of the trip.

Source

¹ MoneyHelper, 17 June 2024

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Junior ISAs are long term tax-efficient savings accounts for children. Withdrawals will not be possible until the child reaches age 18. A Junior ISA is only available to children under the age of 18 who are resident in the UK.  It is not possible to hold both a Junior ISA and a Child Trust Fund (CTF).  If your child was born between 1 September 2002 and 2 January 2011 the Government would have automatically opened a CTF on your child’s behalf.  If your child holds a CTF they can transfer the investment into a Junior ISA.  Please note that Fidelity does not allow for CTF transfers into a Junior ISA.  Parents or guardians can open the Junior ISA and manage the account but the money belongs to the child and the investment is locked away until the child reaches 18 years old. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.