Whether you’re a parent or grandparent, you no doubt want to give the children you love the best financial start in life.
Most commonly, as Flagstone reports, loved ones will set money aside to help a child save for further education, their first home, or their first car. In other cases, you might want to provide them with a financial safety net to support them in adulthood.
There are numerous options for building wealth for a child’s future, each with varying growth potential, tax-efficient advantages, and access restrictions. By getting started, you can allow more time for the funds to grow.
Read on to learn three common and effective ways to start building wealth for a child in 2026.
1. Junior ISAs can offer a tax-efficient way to save and invest for children
Junior ISAs (JISAs) provide a tax-efficient wrapper to help loved ones set money aside for a child’s future. The child can typically take control of these savings and investment accounts from age 16 and access the full fund when they turn 18.
As of 2025/26, each child has a tax-free JISA allowance of £9,000 a year. This means that tax won’t be charged on interest or investment returns for contributions up to this amount.
There are two types of JISA to choose from:
- Cash JISA: Funds are saved and typically accrue interest
- Stocks and Shares JISA: Funds are invested and may grow through return
Since the value of a Stocks and Shares JISA can potentially go down as well as up, Cash JISAs are typically seen as the lower-risk option.
However, MoneyWeek reports that investing through a Stocks and Shares JISA could yield greater returns in the long run. Assuming a modest annual growth rate of 5%, a monthly investment of £55.50 could grow to a total pot worth £18,000 between birth and the child’s 18th birthday.
By comparison, in December 2025, Which? found that the top interest rate for a Cash JISA was 4%.
Of course, investment returns are not guaranteed, and historical stock market data is not a predictor of future performance. As such, you may choose to pay into both a Stocks and Shares JISA and a Cash JISA for your child. The £9,000 tax-free allowance can be spread across both accounts simultaneously.
Whichever type of JISA you choose, remember: the earlier you start paying in, the more time the funds will have to grow.
2. Children’s pensions can also help grow their funds tax-efficiently
Like JISAs, a children’s pension – most commonly a junior self-invested personal pension (SIPP) – offers a tax-efficient wrapper to save and invest for their future.
As with many defined contribution (DC) pension plans, the funds are typically invested in a diversified portfolio of assets. The returns are not taxed and are reinvested over time to deliver compound growth.
Additionally, you can usually boost the pot further with tax relief at a rate of 20%. As such, a contribution of £100 would cost you £80, with the government topping up the remaining £2
Assuming they have no earnings, each child is eligible for tax relief on contributions up to £2,880 a year as of 2025/26, which would result in £3,600 being paid into their pension.
While JISAs allow the child to access their funds from age 18, they generally have to wait until they reach the normal minimum pension age (NMPA) to access money in their pensions. The NMPA will rise from 55 to 57 in April 2028, and may continue rising throughout the child’s lifetime.
Although this does mean they could wait decades to access the money you set aside for them, it could also result in significant growth by keeping the funds invested for longer. According to MoneyWeek, a child who received the maximum contributions of £2,880 a year with 20% tax relief could have a pot worth £420,000 by age 60, without them needing to pay in any more after age 18.
3. Trusts can provide flexible financial support throughout a child’s life
While JISAs and pensions typically become fully accessible from a predetermined age, certain trusts can offer more flexibility for the child to receive funds throughout their lifetime. Trusts allow a “settlor” to put money or other assets aside for a selected “beneficiary”, with the funds overseen and managed by a “trustee”.
There is a wide range of trusts to choose from, but some of the most common types that you might use to gift money to a child include:
- Bare trusts: Also known as “absolute trusts”, these grant the beneficiary full ownership of the funds. They gain full access at age 18 (England), but the trustees can use the funds earlier for the child’s benefit
- Discretionary trusts: In this case, one or more trustees control the funds at their discretion. They decide who receives the money, when, how much, and what it can be used for. As such, they could release funds to your beneficiaries as the need arises, rather than all in one go
- Interest in possession trusts: These can be used to entitle nominated beneficiaries to an income from the trust (such as dividends or interest), while granting ownership of the capital to different beneficiaries. For example, you might leave the capital to your children, while ensuring your spouse receives the income for the rest of their lifetime.
Funds within a trust are typically invested to provide long-term growth. However, depending on the type of trust and income generated, returns may be subject to tax.
While growth can be stifled by taxation, trusts can provide long-term safeguards to help prevent the money from being either used up quickly when the child turns 18, or lost to divorce or bankruptcy.
Get in touch
There are multiple options to consider when looking to build wealth for a child’s future. Crucially, it can be difficult – if not impossible – to remove funds once they have been paid into a child’s account. As such, it’s important to make an informed decision when choosing the right approach for both you and the child.
For support to get started with building a child’s wealth, email info@doddwealthcare.co.uk or call 01228 530913 / 01768 864466 to learn more about how we can help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning or trusts.
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 implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
