Inheritance Tax UK: How grandparents can gift an ‘unlimited amount of excess income’ | Personal Finance | Finance
“A parent or guardian can open a Junior ISA for the child, which in most cases a grandparent can also pay into.
“In the ISA wrapper all interest earned is tax free. Any funds in a JISA will revert to the child once they reach 18, meaning it has the benefit of being more readily available to pay for things such as a first car or to help with university tuition fees.
“Grandparents with a longer term view may think about paying into a pension for their grandchild, potentially benefiting from many years of capital growth – but the child will not be able to access this until they reach 55.”
Some may want to gift more than these amounts, and Mr Jameson explained there is a way to gift an “unlimited amount of excess income”.
He said: “It is possible to gift an unlimited amount of excess income and for such gifts to be immediately exempt from IHT subject to meeting three conditions: the gifts are regular, they are made out of income, and importantly, the donor’s standard of living is not adversely impacted having made the gifts.”