Helping your children or grandchildren get ahead in life – whether it’s buying a first home, going to university, or simply finding their feet as they start out – can be one of the most fulfilling things you do as a parent or grandparent.
Many women today are embracing this supportive role, often referred to as the “Bank of Mum and Dad” (BoMaD). In fact, recent research from estate agent Savills shows that nearly half of all first-time buyers now receive financial help from family, with an average gift or loan of £55,572.
While your support can make a huge difference to your loved ones’ lives, it’s also important to ensure it doesn’t come at the cost of your own financial wellbeing. With the right planning, you can help those you care about while staying secure and confident about your own future.
Ways You Can Help Your Children Financially
Support can come in many forms – some big, some small – but each one has the potential to ease financial pressure and create opportunities for your family.
Helping with a home deposit is one of the most common ways parents lend a hand. Whether you choose to gift a lump sum or offer a loan with clear terms, it’s worth considering how this might affect things like inheritance tax (IHT) or your long-term savings.
Another thoughtful option is contributing to a Lifetime ISA (LISA). This savings account allows your child to put away up to £4,000 a year, with the government adding a 25% bonus (up to £1,000 annually). It’s designed to help first-time buyers purchase homes worth £450,000 or less – and your contribution could make all the difference.
If you prefer to avoid gifting money outright, some banks offer alternatives. For example, Barclays’ Family Springboard mortgage lets you use your savings as security on your child’s mortgage – without handing over the funds. Your money is returned after a fixed period, as long as repayments are made.
Supporting university costs is another area where your help can have a lasting impact. Between tuition fees, rent, and living expenses, the financial burden can add up quickly. You might choose to pay fees directly, contribute toward accommodation or travel, or use a Junior ISA (JISA) to build savings in a tax-free account. These funds become accessible at age 18 and can support education or other major life milestones.
As your children move into the world of work, the early years can be financially challenging. A regular allowance for bills or travel costs, or a one-off gift to ease the transition, can offer a welcome safety net. Just be mindful of tax rules around gifts – particularly IHT exemptions for regular giving – and consider keeping clear records to avoid complications later.
You may also want to help with other significant moments, like a wedding, buying a car, or even supporting a new business venture. For example, parents can give up to £5,000 for a child’s wedding free from IHT, or £2,500 from a grandparent to a grandchild.
If you’re considering helping to fund a start-up business, it’s important to go in with your eyes open. Entrepreneurship carries risk, so it’s worth seeking advice to make sure any financial support is structured appropriately.
Important Tax Considerations
Gifting money, especially in larger amounts, can have tax consequences that are easy to overlook.
When it comes to inheritance tax, you can gift up to £3,000 per year without it affecting your estate. Larger gifts may also be exempt if you live for at least seven years after making them.
If you’re selling assets like a second home or shares to free up funds, be aware of capital gains tax (CGT). For the 2025–26 tax year, the CGT allowance is £3,000, with gains above this taxed at 18% for basic-rate taxpayers or 24% for higher-rate taxpayers. If you’re married or in a civil partnership, you can often share or transfer assets to make the most of both your allowances.
Accessing your pension to help family can also carry tax implications. While the first 25% of your pension pot is tax-free (up to £268,275), anything beyond that is taxed as income and could push you into a higher tax bracket. You should also be aware of the Money Purchase Annual Allowance (MPAA), which reduces how much you can contribute to your pension in future if you start drawing from it.
The key is to approach giving with both generosity and care. It’s natural to want to say yes to those we love—but your own financial wellbeing matters too, especially as you plan for retirement.
How a Financial Planner Can Help
Working with a financial planner can give you peace of mind that your generosity won’t put your own future at risk. They can help you strike the right balance – supporting your family while safeguarding your savings, income, and lifestyle.
A planner can walk you through:
- Tax-efficient ways to structure gifts or support
- How much you can realistically afford to give
- Planning for the future while preserving your retirement plans
- Creating a sustainable cash flow that aligns with your goals
Most importantly, they can provide personalised advice based on your full financial picture – not just what you want to give, but what you need to keep.
Final thoughts
Being part of your children’s or grandchildren’s journey – helping them reach milestones, pursue dreams, or find their independence – is something many women find deeply rewarding. But it’s just as important to protect your own peace of mind.
By understanding your options, being aware of potential tax implications, and seeking advice when needed, you can offer support with confidence – knowing that you’re not only lifting up your loved ones but also protecting your own future.
If you’d like to explore how to support your child or grandchild while keeping a steady hand on your own financial future, we’re here to help. Get in touch today for a conversation that puts you and your family first.