Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, whether the Government plans to introduce a saving scheme to enable grandparents to save for their grandchildren.

The government has introduced a range of measures to support savers, which can be used by grandparents who wish to save for their grandchildren. These include increasing the amount of money that people can contribute to ISAs to £20,000 and introducing an annual Personal Savings Allowance of up to £1,000 for basic rate tax payers and up to £500 for higher rate taxpayers. Thanks to these measures 98% of adults in the UK are currently paying no savings tax on the bank and building society interest and other savings income they receive.

There are a range of savings products in which grandparents can deposit money for grandchildren, including Junior ISAs or Child Trust Funds which are a long-term, tax-free savings accounts for all children living in the UK. Parents or legal guardians can open a Junior ISA on behalf of their children. Any contributor – including grandparents – can deposit savings into accounts, up to the value of £4,128 a year. Once the child reaches 18 he or she will have full access to the savings pot.

Grandparents can also purchase NS&I’s Premium Bonds for their grandchildren. Premium Bonds are entered into a monthly prize draw giving every owner of Bonds a chance of winning completely tax-free prizes. Until the child reaches 16, the nominated parent or guardian of the child will look after the Bond and any prizes won. Premium Bonds for grandchildren must be applied for by post.