Branches & agencies
If you’re wondering, ‘Can grandparents open a savings account for grandchildren? ‘ then you have come to the right place. While UK regulations state that only a parent or legal guardian can officially open a Junior ISA, there are still great options available; grandparents can open a Young Saver or a Children’s Regular Saver account here at Hinckley and Rugby Building Society.
In this article, we will discuss the different types of accounts available and the different tax treatments of grandparents compared with parents. Choosing a member-owned building society to grow your grandchildren’s first nest egg is a great way to provide long-term stability for you, your grandchildren, and your community.
Can a grandparent open a savings account?
Yes, grandparents opening savings accounts for grandchildren is very common here at Hinckley and Rugby Building Society. Grandparents act as nominees for the child, meaning they manage the account, but the money legally belongs to the grandchild.
Saving on behalf of your grandchild helps them build long‑term financial security and provides a strong foundation for the future.
Tax considerations when saving for grandchildren
Savings from grandparents are treated differently for tax purposes than money given by parents.
Interest earned on money from grandparents is not considered the parent’s income. This means it does not affect the parent’s tax or Personal Allowance.
Each child has their own Personal Allowance (currently £12,570). In most cases, the interest earned on their savings will be below this amount, so no tax is due.
Tax treatment depends on individual circumstances, and rules can change.
You can find more information about interest on savings for children here:
https://www.gov.uk/savings-for-children
You can gift money free of Inheritance Tax (IHT) using your £3,000 annual exemption each tax year. Any unused portion of this allowance can be carried forward for one tax year only. Larger gifts may be subject to IHT if you die within seven years.
For more information on gifts and inheritance tax, visit: How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts – GOV.UK
This information is provided for general guidance only and does not constitute tax advice. Please refer to the official GOV.UK resources or seek advice from a qualified tax adviser or solicitor.
At Hinckley and Rugby, we have two carefully designed account options which may be suitable for your grandchildren. These include the Children’s Regular Saver and the Younger Saver.
| Children’s Regular Saver | Young Saver | |
| Interest Rate | 3.65% | 3.20% |
| Minimum Investment | £1 | £1 |
| Withdrawals | On closure of account | Any time |
| Monthly Cap | £250 | N/A |
| Maximum Balance | £500,000 | £10,000 |
| Interest Paid | Annually | Annually |
| Postcode restricted | No | No |
The Children’s Regular Saver account is designed for monthly savings up to £250 and offers a higher interest rate with the understanding that withdrawals can only be made when the account is closed or when the account matures on the child’s 18th birthday. It’s an ideal option for anyone looking to maintain a consistent saving habit that supports their grandchild’s future goals, such as education, a first house deposit, or any milestone they may reach as they grow.
The Young Saver account is a simple, easy access account, which is ideal for teaching children the importance of money and savings. It’s great for pocket money and birthday money because withdrawals are allowed at any time. Plus, for slightly older children aged 13-17, they can even open and operate their own savings account, helping to prepare them for the future.
For young savers under 18 years of age
We will need to see either a birth certificate or passport and a document confirming their address. This could be a bank statement or utility bill and can be in the name of a parent or guardian living at the same address if not available in the young savers’ name. These documents need to be originals, not photocopies, and they will be returned to you as quickly as possible.
If you are opening an account for your grandchild as a registered nominee, the document to confirm the child’s address is not required.
For parents, relatives (including grandparents) or legal guardians wishing to operate an account for a young saver
We use an electronic verification system when you open a savings account. If this is successful, you will not need to do anything. However, in certain cases, you will be asked to provide additional proof of identity (for example, if you are not listed on the electoral roll or you have recently moved house).
If you are required to provide additional identification, you must supply two items acceptable to the Society to verify your name and address. The society will be unable to open your account until we have completed identification procedures.
Absolutely, you can open both a regular saver and a young saver account, but you can only have one of each per grandchild.
Not only do we offer face-to-face service, FSCS-protected savings and competitive rates, but we also provide passbooks to our account holders. Passbooks show a running balance of your account. These are a great way for children to see their money grow and the interest they have earned accumulate over time, helping them to better understand how savings accounts work.
As your grandchildren grow older, they can take a more active role in managing their savings. Between the ages of 13 and 17, the nominee has the option to transfer the account into the child’s sole name, giving them full control of their funds and helping them learn valuable money management skills.
Alternatively, when the child turns 18, the account will automatically become an Easy Access account unless they choose to open a different account or close the account.
At this point, for our Children’s Regular Saver, the nominee registered on the account will be notified that they will be removed, ensuring a smooth and transparent transition. For our Young Saver, we will write to advise that the nominee should be removed from the account, which can be actioned at your convenience.
In summary, can grandparents open a savings account for grandchildren? Yes, there are various options available to help build a strong financial future and create a world of opportunities for your grandchildren.
You may not be able to open a Junior ISA on their behalf, but we actively encourage grandparents to open savings accounts for grandchildren to teach your grandchildren about the benefits of savings and the value of money while also building a secure pot that will grow alongside them.
If you’d like any further support on opening an account, please get in touch with our team, and we can help guide you through the process of setting up your grandchild’s savings account.
