Welcome, fellow BCer.
Always a tough one, especially as you want your nephew to want to pick it up in order to play it and improve. Yamaha don’t make a bad instrument at any price point IMO. Therefore, they would be my go to brand for a beginner. With that budget, I’d look at the £300ish Pacificas or the Revstars (a bit retro looking, but pointy/SGish enough), they sound great and play well. With shapes in minds, an Epiphone SG in the same £300+ price bracket could also be considered. However, if it was my money, it would be Yamaha all day long (says the man who owns a Squier and an Epiphone ).
In terms of an amp and FX, I think I’d start off with a modelling amp with built in FX, something like the Boss Katana, Vox Cambridge or Line6 Spider. 50 watts or so should be plenty for starters and a headphone out is a must (all 3 do). I’ve seen some very favourable reviews of the Boss, so I think your sister would be safe with that. If they don’t come with a footswitch, I’d always encourage getting one to get the full use of the amp.
Guitar and amp for £500-£600 with maybe some room for a few accessories.