St. James’s Place shares tax smart ways to give this Christmas

As households look for ways to celebrate Christmas without stretching their budgets, new research from St. James’s Place (SJP) shows many are taking a more thoughtful, cost-effective approach to festive giving this year, particularly in the wake of the Autumn Budget and continued pressure on day-to-day finances.

One in five (20%) said they will make Christmas decorations or re-use those from previous years, while a similar 16% planned to hand-deliver gifts and cards to save on postage. A further 12% said they intend to buy second-hand or discounted gifts, while 5% planned to give their time or skills, such as babysitting, instead of purchasing presents.

With pensions due to come into the scope of inheritance tax from 2027, financial gifting was also high on the agenda for gift givers. One in six (17%) planned to give money to children and grandchildren, with 4% considering gifting Premium Bonds, and 3% saying they plan to set up a Junior ISA, savings account or child pension.

Gifting money can make a real difference to someone’s financial wellbeing, helping to make ends meet, contribute to future savings or even pay for a family holiday. But cash gifts are not the only option, and there are many other tax smart ways to give to your loved ones financially this holiday season. 

Claire Trott, Head of Advice at St. James’s Place, shares her top tax-smart gifting tips for Christmas 2025 and the New Year: 

1. Make the most of your £3,000 annual gifting allowance

“Cash gifts remain one of the simplest and most effective ways to support loved ones. In the 2025/26 tax year, every individual can gift up to £3,000 using their annual allowance, helping to reduce the size of their estate for inheritance tax (IHT) purposes. You can also make unlimited small gifts of up to £250 per person. For larger gifts, the seven-year rule may apply, so keeping good records is important.”

2. Consider Premium Bonds as a low-risk financial gift

“Premium Bonds are a popular option for families wanting to give a financial gift with long-term potential. Any prizes are tax-free, making them an attractive choice, particularly for higher-rate taxpayers or for children beginning their savings journey.”

3. Start or contribute to a Junior ISA (JISA)

“A JISA can be one of the most valuable financial gifts you can give a young person. The 2025/26 annual limit remains £9,000, and anyone can contribute once the account is opened. Starting early allows children to benefit from compound growth over many years.”

4. Kick-start a child’s pension

“A child’s pension is a truly long-term gift that can grow significantly over decades. Contributions of up to £2,880 a year receive basic-rate tax relief, increasing the total contribution to £3,600. Even modest savings made early in life can have a substantial impact at retirement.”

5. Use tax-free wedding gifting allowances

“For families with weddings coming up, you can gift £5,000 to a child or £2,500 to a grandchild for their big day, completely free from IHT. These allowances sit in addition to the annual £3,000 gifting exemption.”

6. Be mindful of CGT when gifting assets

“While cash is straightforward, gifting assets such as shares or property can trigger Capital Gains Tax (CGT). With the 2025/26 CGT exemption remaining low, and rates at 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers, it’s important to understand any implications before making a gift of value.”