Christmas gifting

How to make gifts to a charity, family and friends

Christmas gifting

Christmas gifting

With the festive season approaching, Christmas is the time of giving. Have you thought about some of the ways you can make gifts to a charity, family and friends?

Significantly higher returns

Lifetime gifting is not only a good way to set up children for adulthood but is also a way of mitigating any Inheritance Tax concerns. However, what’s clear is that not all saving products for children are made equally. With interest rates at historic lows, if you are looking to put money away for a child to enjoy when they grow up investing is by far the best way to maximise your gift.

Some people remain worried about the volatility of investing but, with an 18-year horizon, putting money to work in the market can give significantly higher returns than products such as Premium Bonds.

One option to consider is a Junior Individual Savings Account (JISA). These were introduced in the UK on 1 April 1999 as a long-term replacement for Child Trust Funds (CTFs). If a child was born between 2002 and 2011, they might already have a Child Trust Fund, but these can be transferred into a JISA.

Save and invest on behalf of a child

If the CTF is not transferred, when a child reaches 18 they’ll still be able to access the money. Or they can choose to transfer it into a normal Cash ISA. A JISA is a long-term savings account set up by a parent or guardian and lets you save and invest on behalf of a child under 18 without paying tax on income or gains.

With a Junior Stocks & Shares ISA account, you can put your child’s savings into investments like funds, shares and bonds. Any profits you earn by trading investment funds, shares or bonds are free from tax. Investments are riskier than cash but could give your child a bigger profit, and the value of a Junior Stocks & Shares ISA can go down as well as up.

Money in the account belongs to the child, but they can’t withdraw it until they turn 18, apart from in exceptional circumstances. They can start managing their account on their own from age 16.

Financial education from a young age

The Junior ISA limit is £9,000 for the tax year 2021/22. If more than this is put into a Junior ISA, the excess is held in a savings account in trust for the child – it cannot be returned to the donor.

Friends and family can also save on behalf of the child as long as the total stays under the annual limit.

When your child turns 18, their account is automatically rolled over into an adult ISA . They can also choose to take the money out and spend it how they like. It is therefore important to ensure that children are given financial education from a young age so that when they can get their hands on the funds they use them wisely.

The gift of giving

You can gift money to family members tax-efficiently if the gift is given at least 7 years before you die; the gift is given to your spouse, registered civil partner, or a UK registered charity; and, the total gift is less than the annual allowance (currently £3,000 tax year 2021/22).

When making gifts to a spouse or registered civil partner no Inheritance Tax is payable on transfers.

Effectively the amount liable to Inheritance Tax is deferred until the death of the second spouse or registered civil partner.

Each individual can give away up to £3,000 in total, every tax year, free from Inheritance Tax under the annual exemption. This allowance can be backdated by one year and so you can carry forward any unused allowance to the next tax year.

Small gifts of up to £250 in value are exempt from Inheritance Tax as long as you’re not gifting to someone you’ve already used your £3,000 allowance on.

Any gifts you make in consideration of a marriage or registered civil partnership are exempt from Inheritance Tax as long as you make the gift before the wedding and the wedding goes ahead.

You can gift up to £5,000 to a child, £2,500 to a grandchild, and £1,000 to anyone else.

Charitable donations

If you are thinking of making a charitable donation, charities can claim Gift Aid on most donations.

You can donate unlimited amounts of money to charity without Inheritance Tax being due. Donating through Gift Aid means charities can claim an extra 25p for every £1 you give. It will not cost you any extra.

You need to make a Gift Aid declaration for the charity to claim. You usually do this by filling in a form and can contact the charity if you have not got one.

If your employer, company or personal pension provider runs a Payroll Giving scheme, you can donate straight from your wages or pension. This happens before tax is deducted from your income.

Need more information?

Whilst it is kind and appreciated if you gift generously, remember you should always only give what you feel you can afford. Helping out family financially is hugely beneficial to recipients, but also make sure your needs are met too.



This information has been prepared using all reasonable care.  It is not guaranteed as to its accuracy, and it is published solely for information purposes.  It is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice.

Information based on our current understanding of taxation legislation and regulations.  Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down.  You may not get back the original amount invested.

Past performance is not a reliable indicator of future performance.

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