How Grandparents Can Gift Money to Grandchildren Tax-Free
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As a grandparent, you want to do more than just give occasional gifts — you want to make a lasting difference in your grandchild’s future. Whether it’s supporting their education, helping them get on the property ladder, or giving them a financial boost as they start out in life, your contribution can have a real impact.
With the rising cost of education and housing, planning ahead has never been more important. Fortunately, there are several ways to gift money to your grandchildren in a structured, tax-efficient way.
We’ll walk you through three practical strategies to help you support their future while making the most of current tax rules.
The Small Gift Exemption (Easy, Annual, Tax-Free)
Under current Irish tax rules, you can gift up to €3,000 per year to each of your grandchildren completely tax-free. This amount does not count towards their lifetime Capital Acquisitions Tax (CAT) threshold.
Key Benefits:
- No paperwork required
- No tax payable by you or the child
- You can give €3,000 to each grandchild, every year
Things to Keep in Mind:
- The limit is €3,000 per child, per year, so it’s not suitable for larger one-off gifts
Best For:
Grandparents who want to make regular, smaller gifts to help with day-to-day costs like school expenses, extracurricular activities, or to slowly build up a savings fund over time.
Example:
If you have one grandchild, you and your spouse can each gift €3,000 per year, giving a combined total of €6,000 annually — completely tax-free.
Over the course of 10 years, that adds up to €60,000 gifted without triggering any Capital Acquisitions Tax (CAT) or affecting their lifetime inheritance threshold.
Children’s Savings Plan (Flexible, Gradual Saving)
A Children’s Savings Plan is a regular monthly investment held in your own name, designed to build a fund for your grandchild’s future. You stay fully in control of the money and can choose when to gift at a later stage.
This option is well-suited to grandparents with a longer-term outlook who are comfortable saving over a period of five years or more. You can start from as little as €100 per month, with the flexibility to adjust or stop contributions at any time.
Key Benefits:
- All contributions made into the plan are treated as belonging to the child, giving them beneficial entitlement from the outset.
- You can gift up to €3,000 per year to your grandchild without triggering Capital Acquisitions Tax (CAT) or impacting their lifetime threshold.
- Flexible monthly contributions to suit your budget
- The policy can be cashed in while the child is a minor, but funds must be used for their benefit.
Things to Keep in Mind:
- When you gift the fund in the future, Capital Acquisitions Tax (CAT) may apply
- Investment growth is subject to Exit tax
Best For:
Grandparents planning ahead for long-term goals, such as helping with third-level education costs, contributing to a house deposit or providing a financial foundation when their grandchild reaches adulthood.
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Children’s Investment Trust (Lump Sum, Long-Term Gift)
Children’s Investment Trust allows you to make a lump sum gift for a child under 18, using a Bare Trust structure. The funds are invested on the child’s behalf, with any growth potentially free from Capital Acquisitions Tax (CAT) — making it a tax-efficient way to pass on wealth.
Key Benefits:
- You can gift up to €40,000 per grandchild over their lifetime without triggering Capital Acquisitions Tax (CAT). This is the Group B lifetime CAT threshold (as of 2025), which applies to the total value of all gifts and inheritances a grandchild receives from all Group B relatives — including grandparents, aunts, uncles, and siblings. Any amount above €40,000 is taxed at 33%.
- Any growth from the Investment Bond is not considered an additional gift, so it is not subject to Capital Acquisitions Tax (CAT).
- You (as trustee) retain control of the funds until the child turns 18.
Things to Keep in Mind:
- You can’t get the money back — once gifted, it belongs to the child.
- Lump sum only.
- The child must be under 18 at the start.
- Exit tax applies to any investment growth, and a 1% government levy is charged on the amount you invest (your premium).
Best For:
Grandparents who want to make a significant, long-term gift, such as contributing to a house deposit, funding third-level education, or supporting their grandchild’s financial future, while making the most of current CAT thresholds.
When Is the Best Time to Start a Savings Plan or Lump Sum Investment for Your Grandchild?
The earlier, the better.
When it comes to investing for your grandchild’s future, time is your greatest advantage. Starting early gives the money more time to grow, thanks to the power of compound growth, where not only your original investment earns returns, but those returns can then earn returns too. Over 10, 15, or even 18 years, this can make a substantial difference.
If your grandchild is still very young, now is the ideal time to put a plan in place. A lump sum gifted today could grow significantly by the time they’re ready for college, saving for a house deposit, or starting their adult life.
Even small amounts invested early can become meaningful over time. The key is to start — whether it’s a regular savings plan or a one-off investment.
Combine Your Gifting Strategies
You don’t have to stick to just one method. Many grandparents choose a combination of all three options to meet different needs:
- Use the Small Gift Exemption for simple, yearly tax-free gifts.
- Set up a Savings Plan to build a flexible fund over time.
- Invest in a Children’s Investment Trust if you have a lump sum and want to maximise tax efficiency.
By combining strategies, you can support both short-term needs and long-term goals, making sure every euro you give works harder for your grandchild’s future.
Get a Financial Planning Quote
Get a Financial Planning Quote
Whether it’s a small annual gift or a tax-efficient investment for the years ahead, there are more ways than ever to support your grandchildren financially, without leaving it all to the taxman.
From regular savings plans to transferring assets during your lifetime, smart financial planning can make a lasting impact. Speak to our financial advisors to explore your options and find the best solution for your goals. We’re here to help you put a plan in place that works for both you and your family.
We are experts in personal and business protection, savings and investments, pension tracing, retirement planning & pensions, business owner and personal financial planning, mortgages, and wealth management and extraction.
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