Welcoming a grandchild in 2026? 3 conversations to have now
From providing childcare to the financial support they'll need, read three conversations to have with your children if you're expecting a grandchild in 2026.
Your children’s children are one of life’s great joys. Being a grandparent is hugely rewarding, allowing you to spend time with a child without all the stress of being a full-time parent.
Of course, welcoming a new member into your family also comes with important financial considerations, many of which could involve you as a grandparent.
So, whether it’s the first or one of a growing brood, if you’re expecting a grandchild in 2026, discover three conversations that are worth having with your children now before the baby arrives.
1. The amount of childcare you will provide, and how
Childcare is expensive, with MoneyHelper reporting that full-time care for a child under two costs £238.95 a week – that’s after working parent entitlements are considered.
As a result, your children might be banking on you helping to care for your grandchild, either literally or by contributing towards childcare costs.
There are pros and cons of both these outcomes for you to consider.
Caring for your grandchild
Your grandchild might spend one or a few days a week with you, allowing their parents to go back to work without the need to pay for nursery.
This can be an effective way to reduce childcare costs, while simultaneously allowing you to spend quality time with your grandchild.
But before you commit to this, remember that caring for a grandchild could be time-consuming, and may prevent you from doing the things you really want in later life, such as travelling.
It’s crucial to discuss this with your child, creating an arrangement that gives you the flexibility and time to pursue your ambitions while offering them the help they need.
Similarly, there might also be costs to think about, such as feeding them or paying for activities and days out. As such, it might not necessarily be an entirely “free” alternative to formal childcare.
Again, it’s sensible to talk about this with your child ahead of time. You might want to see how these costs would fit in your budget, or even agree on a fee that your child pays for any expenses you incur while caring for your grandchild.
Equally, it’s worth noting that caring for a grandchild could allow you to claim National Insurance (NI) credits, as long as their parent claims Child Benefit. So, if you have gaps in your NI record, caring for a grandchild could be an effective way to top it up.
Paying for your grandchild’s care
Alternatively, you might contribute financially towards childcare costs, supporting your child without encroaching on your own time or later-life ambitions.
Of course, with childcare costs being quite high, you will still need to factor this into your budget. You might arrange with your child to pay a portion of the costs, with them contributing the rest.
There may also be a financial benefit to this, as it could reduce a potential Inheritance Tax (IHT) charge for your children.
Usually, you can only gift a certain amount and have it fall outside your estate immediately (up to £3,000 in 2025/26). You must survive any financial gifts above this limit for at least seven years for them to be entirely free from IHT.
But, if you make gifts directly from surplus income, these can immediately fall outside your estate, provided that they:
- Are from income, not savings
- Form part of your normal expenditure and are made regularly
- Don’t affect your standard of living.
So, there could ultimately be financial benefits to doing this.
Whatever you decide to do, speaking to your child beforehand can ensure that you’re aligned in your expectations and on the same page.
2. What financial support you will offer your grandchild
With financial considerations in mind, it’s worth thinking about any other support you might offer your grandchild.
As above, that could be in the form of contributing towards the cost of nursery, schooling, or even university when they are older. Again, so long as you make these payments regularly, doing so could reduce an IHT bill in future.
Alternatively, you might want to set your grandchild up for their financial future by putting funds aside that they can access when they’re older. There are various ways you could do this:
- Savings account. Money you put in a savings account in your grandchild’s name will accrue interest over time. Most savings accounts allow children to take control between 11 and 16, varying from provider to provider. Bear in mind that interest generated will count towards your Personal Savings Allowance and could see you incur an Income Tax charge if it exceeds certain thresholds.
- Junior ISA. A Junior ISA (JISA) is a tax-efficient saving or investment account, with any interest or investment returns generated free from Income Tax or Capital Gains Tax (CGT). You can contribute up to £9,000 in 2025/26 to JISAs, and you can split this across Cash or Stocks and Shares variants as you see fit. Your grandchild will be able to take control of the account at 16 and access the funds from 18.
- A child pension. You could start a pension for your grandchild from the day they are born, creating a pot they’ll be able to access in later life – the earliest they will be able to access this is currently 57, although this may rise in future. Assuming they have no earnings, you can tax-efficiently contribute up to £2,880 to a child’s pension a year (2025/26), with government tax relief topping this up to £3,600. This wealth will also be invested over time, potentially meaning they’ll have a healthy sum to access when they retire.
The most appropriate option will depend on which goals you most want to help your grandchild achieve. Talking about this with their parents can be beneficial as they might have an idea of what they want to help with and what would be most useful for you to contribute towards.
It’s also important to set expectations of how much you’ll put into whatever savings or investing vehicle you choose to avoid any surprises when your grandchild comes to draw on the wealth.
3. Who will be your grandchild’s guardian if the unthinkable were to happen
As difficult as it is to think about, it’s hugely important for your grandchild’s parents to have a contingency plan in case of their deaths.
They may well choose godparents, either formally or informally, to take custody of their children if they were to pass away.
Alternatively, they might ask you to take on this responsibility. In this case, it’s important to be honest about how this will fit into your lifestyle, especially as you get older and potentially less able to care for a child.
No matter what conclusion they come to, it’s vital for your child to think about this, choose an outcome that suits everybody, and clearly communicate this in their will to make it legally binding. By encouraging them to do so, you can ensure your grandchild’s welfare in all eventualities.
Get in touch
If you’d like to organise your wealth for the benefit of you and your loved ones, we can help.
Email us at hale@kelland.co.uk, or call 0161 929 8838, to discover how we can support you.
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.
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.
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.
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.
The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.