What saving options are there for children?
Depending on how much you want to save, for how long, and how much risk you are prepared to take, there are many different options. If you are looking for long-term savings, Junior ISAs offer a tax-efficient way to save for your child’s future. You can save up £4,260 a year and the child will pay no tax on the interest they earn from a Junior Cash ISA, or on any capital gains from a Junior Stocks and Shares ISA. The money is safely locked away until the child is 18. Don’t forget tax treatment varies according to individual circumstance and is subject to change. Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers. Another option is a child pension. A parent can set it up and it transfers to the child when they’re 18. You can save £2,880 tax efficiently each year and the government will top it up by 25%. You can contribute more than £2,880 but it won’t be topped up. Like any pension, the cash will not be accessible until the child is 55, so there is no danger of them spending the funds unwisely when they are too young.