Junior Uncomplicated

WHAT IF YOU GAVE THEM A HEAD START?

£1 A DAY.

ALMOST £10,000 AT 18?

That sounds almost too simple.

But that's exactly why I want to show you the numbers.

I'm starting with £1 a day for my granddaughter.

That's only around £30 a month.

If that contribution increases over the years to keep pace with inflation, and the money achieves an illustrative 5% annual investment growth, the numbers become surprisingly interesting.

£1 A DAY → ALMOST £10,000

Over 14 years, the illustration shows:

Money contributed: around £7,187

Illustrative value at 18: around £9,988

That's nearly £10,000 from what started as £1 a day.

And that's before we consider what happens if her parents and other grandparents chip in as well.

"Can family members make regular contributions?"

AND WHAT ABOUT GIFTS FROM GRANDPARENTS?

There's another interesting part of this story that is worth knowing about.

Many people know about the £3,000 annual Inheritance Tax gift exemption. Broadly speaking, an individual can give away up to £3,000 of gifts in a tax year without those gifts being counted as part of their estate for Inheritance Tax purposes.

But there's another exemption that can be particularly interesting when you're making regular gifts from your income.

HMRC calls this “normal expenditure out of income.”

If the payments form part of your normal expenditure, are made from your income, and you can still maintain your normal standard of living after making them, they may qualify for an Inheritance Tax exemption. GOV.UK specifically includes regular payments into a savings account for a child under 18 as an example.

So, for example, a grandparent might decide to make a regular contribution towards a grandchild's savings or Junior ISA.

But this isn't a blanket £3,000-a-year rule.

The circumstances matter, and you need to be able to demonstrate that the conditions are met. Keeping good records of your income, expenditure and regular gifts can therefore be important.

This is general educational information, not personal tax or Inheritance Tax advice. The rules and your circumstances can affect whether an exemption applies. If you're considering making significant or regular gifts, consider getting appropriate tax or estate-planning advice.

I DON'T KNOW WHAT SHE'LL WANT TO DO AT 18.

And that's the point.

I don't want to decide for her.

Maybe she'll want to travel. Maybe she'll want to learn to drive. Maybe she'll go to university. Maybe she'll start a business. Maybe she'll want to do something none of us have thought about yet.

I just want her to have some choices.

And that's the bit I want you to think about.

£1 doesn't sound like much.

But £1 every day for 14 years is a very different proposition.

Small amount. Long time. Big difference.

WHAT IF IT WAS £2 A DAY?

WHAT IF IT WAS £5 A DAY?

WHAT IF THE FAMILY ALL CHIPPED IN?

WHAT IF YOU COULD GIVE SOMEONE A HEAD START?

Maybe it's your child.

Maybe it's your grandchild.

Maybe it's someone else you care about.

You can't give them more time.

But you might be able to give their money more time.

And sometimes, that's a pretty good place to start.

SMALL STEPS TODAY. A BRIGHTER TOMORROW.