Legal & General’s most recent research puts it plainly: around half of first-time buyers under 35 now rely on family help to get onto the property ladder, with the average gift running to more than £27,400. That’s just one of several ways families end up supporting each other financially, and it’s rarely a single decision – it’s gifting, saving and planning spread across years, sometimes decades. Below are the routes that come up most often, and how each one actually works in practice.
Gifting money directly
The simplest option is also the one with the most rules attached. You can give away £3,000 a year without any Inheritance Tax consequence, plus a further £250 to as many other people as you like. Larger gifts – towards a deposit, say – fall outside your estate entirely if you survive seven years, and are only ever taxed on a sliding scale if you don’t. We’ve covered the full mechanics of this, including the exemption most people don’t realise applies to regular financial support rather than one-off gifts, in our piece on passing on wealth while you’re still here.
Starting a pension before they’ve even earned a wage
Less well known: you can open a pension for a child or grandchild of any age, including a baby, and contribute up to £2,880 a year into it – HMRC automatically tops this up with basic-rate tax relief to £3,600, regardless of whether the child has any earnings at all. It isn’t a large sum on paper, but the maths behind it is the actual point. A child’s pension has upwards of sixty years to grow before it’s likely to be touched, which is a length of time almost nobody gets the chance to use in their own pension. Even modest, occasional contributions compound into something substantial over that stretch. The current minimum pension access age is 57 from April 2028, though for a baby or young child, whatever the access age eventually turns out to be by the time they reach it, the decades of tax-advantaged growth beforehand is the real appeal – not the exact age itself, which is genuinely too far off to predict with any confidence today.
Junior ISA or junior pension – which one?
A Junior ISA takes up to £9,000 a year (unchanged since 2020/21 and frozen until at least 2030/31), grows free of tax, and becomes the child’s outright at 18 – useful for a house deposit, a car, or simply a head start at the point they actually need money to hand. A junior pension does the opposite job: money that’s genuinely locked away for decades, growing with the benefit of tax relief added on top rather than just tax-free growth. Most families we speak to end up doing a bit of both rather than picking one – a JISA for what they’ll need at 18, a pension for what compounds quietly in the background until much later.
The gap university costs actually leave
Tuition fees for English universities rose to £9,535 for 2025/26 and are set to rise again to £9,790 for 2026/27, after years of being frozen. That’s only ever part of the cost, though – Save the Student’s most recent survey put average UK student living costs at around £1,142 a month, against an average maintenance loan received of roughly £640 a month, leaving a shortfall of around £500 a month that has to come from somewhere else. The maximum Maintenance Loan available is £10,830 a year outside London (2026/27, lowest household income band), but it’s means-tested against parental income, so plenty of families find their child qualifies for considerably less than the maximum. Regular monthly contributions towards this shortfall, paid consistently out of surplus income rather than savings, can also fall under the same “normal expenditure out of income” Inheritance Tax exemption mentioned above – HMRC’s own guidance specifically names school and university fees as a typical example of it in practice, provided the payments are genuinely regular and don’t reduce your own standard of living.
For Armed Forces families: a route worth knowing about
Serving personnel whose postings move the family regularly have access to something most families don’t: the Continuity of Education Allowance, which contributes towards boarding school fees so a child’s education isn’t disrupted by a move. It’s available to accompanied personnel expected to be required to move again within four years, subject to conditions including a review if a spouse or partner spends 90 or more days away from the family’s home address over a 12-month period, and eligibility begins from the academic year of the child’s eighth birthday. It generally covers up to around 90% of eligible fees, with families expected to meet the rest themselves, against a ceiling that’s recalculated every summer and published each August by the MOD. For the current 2026/27 academic year, the Army Families Federation lists the ceiling at £9,184 a term for Junior Boarding and £11,586 a term for Senior Boarding – but since this is reviewed annually, and occasionally mid-cycle (as happened in December 2024, following the removal of the VAT exemption on private school fees), it’s worth checking the live figure through your unit HR, JPA, or the CEA Advisory Helpdesk each fee season rather than assuming last year’s number still applies. For families who qualify, it’s a meaningful allowance that’s easy to overlook when working out how school costs fit into the wider family budget.
Keeping it straightforward for whoever administers your estate later
Whichever combination of these you use, the paperwork matters more than it might seem. Regular gifts made under the normal expenditure exemption need to show a genuine, sustained pattern – HMRC typically wants to see three or four years of it – and your executors will need to evidence this using HMRC’s IHT403 form when the time comes. A simple running note of what’s been given, when, and from what income saves a real headache later. We’ve written more on how this fits into a wider family financial plan in this piece, which is worth reading alongside this one.
Let’s work out what you can actually afford to give
We work with clients across Poole, Bournemouth and the wider Dorset area, including a great many Armed Forces families, to figure out how much can comfortably go towards helping children and grandchildren without putting your own plans at risk. If you’d like to talk through your own situation, get in touch and we’re happy to have a no-obligation conversation.
This article is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only. All information is correct at the time of writing (September 2026) and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax treatment of gifts, pensions and ISAs depends on individual circumstances and may change in the future. Continuity of Education Allowance rates and eligibility are set by the Ministry of Defence and reviewed annually; current figures should be confirmed directly with your unit HR, JPA, or the CEA Advisory Helpdesk.
The Financial Conduct Authority does not regulate Inheritance Tax planning, estate planning, or Continuity of Education Allowance.