One in four investors use portfolio to help family and friends

One in four investors have used money withdrawn from their investment portfolio to help friends and family financially, a survey of AJ Bell DIY investors shows.

The data, collected in December 2024, shows that 15% of investors have already used some of their investment assets to support loved ones, while a further 10% said it was something they were considering doing.

Source: AJ Bell. 1,530 DIY retail investors from AJ Bell's investment platform, December 2024

Illustrating how investors are utilising money to support their friends and family with crucial life expenses, starting a family or buying a home, the data reveals the wide range of ways investors use the gains from investing to support both themselves and their family.

Among those who said they’d already given money to friends and family over three quarters (76%) said the gift was worth more than £2,000.

Getting on the property ladder

Helping family get on the property ladder was the most common reason for giving money from investments, with 17% of those who’d gifted money saying it was used for a house deposit and 12% to help with mortgage costs.

Other reasons included helping with a one-off expense, such as replacing a car or boiler (17%), helping pay bills like household utilities (9%), educations costs (6%) or rent (3%).

In around a fifth of cases (22%) financial gifts from investors were for no specific purpose, allowing the recipients to use the cash or assets as they wished.

Others cited medical costs, helping someone fund a business, paying off a student loan, or simply helping children or grandchildren start investing for the future themselves.

Helping your children or grandchildren onto the property ladder can spare them from some of the sacrifices involved in building a deposit, giving them a head start with the security of a place they can call their own.

Likewise, having the financial means to help family members with unexpected costs means you can offer them financial certainty and security at what might otherwise be a difficult time.

Key points to consider

If you’re thinking about gifting from your investment portfolio there are some things to be aware of in addition to the usual gifting rules.

In many cases people will be gifting from an ISA, meaning they simply sell the assets they wish to use and pass on the gift as cash with no immediate tax consequences.

Those who want to give gifts from investments held outside an ISA might want to consider how to do so as tax efficiently as possible. The CGT allowance has been slashed in recent years, but it is still possible to realise gains of £3,000 a year tax-free. For example, a £6,000 investment that had grown by 50% would now be worth £9,000. It could be sold and gifted tax free without incurring any capital gains tax bill.

Your CGT allowance renews every April, so if you can stagger a gift to make use of your CGT allowance across multiple tax years, that could make sense in a lot of cases.

Although you can pass on cash you’ve taken from your pension too if you’re over 55, pensions are ultimately designed to last you through your retirement. If you’re not gifting from your tax-free lump sum(s), anything withdrawn as income instead will be subject to income tax. Taking a large or one-off income withdrawal might push you into a higher tax band or reduce what you can pay back into your pension(s) in future.