Around 23% of all gifts go on university or other educational fees, holidays represent 13%, with driving lessons and house deposits 12% and 9% respectively.

A third of grandparents are considering or intending to give a financial gift and one in ten are considering lending money to grandchildren, according to new research from Saga. The typical gift from grandparents is £9,365, with those in London and the South East giving the largest deposits.

Alex Edmans, head of product at Saga Money, said: “Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get in seeing their grandchildren benefit from the money.

“If you are giving your grandchildren support as a loan rather than as a gift it pays to take a few sensible steps so there is no awkwardness later on. Only half of grandparents said they discussed repaying the loan with their grandchild. Our advice is to be upfront about the conditions of the loan including how you would like the money repaid in order to avoid difficult conversations at a later date.

“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder. On average they take £33,000 out of their property in order to give to family.”

However, there are some considerations of which grandparents should be aware:

1. You can be liable for inheritance tax (IHT): You have an annual gift allowance of £3,000. You can give away larger amounts, but you must survive seven years for them to fall out of the IHT net.
2. Consider care home fees. You may have enough money to fund your retirement today, but do you have plans in place should you need long-term care?
3. Saga recommends making sure the terms of the gift or loan are clear, particularly if there is something specific you want to help your grandchild with or, in the case of a loan, an agreement about how and when it will be paid back. It might sound distasteful at first, but will possibly save a lot of awkwardness in future.
4. Gifting could affect your own or your grandchild’s entitlement to benefits. If you need long-term care in later life, gifts could be regarded as a ‘deliberate deprivation of assets,’ which means taking cash out of your estate to ensure you qualify for means-tested benefits. It can be worth taking advice to ensure you do not fall foul of the regulations.