Your child or grandchild most likely faces significant financial challenges as they struggle with rising house prices and living costs.
Here are a few simple ways you could potentially transform their financial future.
Save into a Junior ISA
You can invest up to £4,368 into a Junior ISA (JISA) in the 2019-20 tax year. Dividends and growth within these accounts are tax free.
While only parents or legal guardians can open a JISA, anyone can contribute - be they grandparents, godparents, or family friends.
The child can access money in a JISA at age 18, using this however they wish - perhaps towards university costs, or building a property deposit.
Make use of bare trusts
If you hold assets on behalf of a child in a bare trust there are no investment limits, and money can be used at any time for the child’s benefit, such as towards school fees.
Gains or income on investments held in a bare trust can use the child’s personal allowances for tax purposes, and the account can remain open beyond the child’s 18th birthday, although at that age they become legally entitled to access the money if they wish.
Pay into a junior pension
If you would like to give a child a head-start for retirement saving, a junior pension is an attractive option.
You can save up to £2,880 a year - boosted by tax relief from the government to a maximum of £3,600 a year. Anyone can invest on behalf of a child into a junior pension, but only a parent or legal guardian can open the account.
Make a gift count
You can gift wealth you have accumulated over the years in several ways. Each year you can give away up to £3,000 which will not be subject to IHT when you die. You can also give £250 to any number of people each year, free from IHT.
It is also possible to make further tax-free gifts – known as ‘potentially exempt transfers’ – but you have to survive for seven years after making the gift for your estate to get the full benefit.
However, it can be tricky knowing when and how to give money to your family alongside securing your own financial future. A financial adviser can help you to build a tailor-made plan to ensure you and your family have the financial security you need today and in the future.
To find out more about how Brewin Dolphin can help you save for your family’s future, request a callback today.
The value of investments and any income from them can fall and you may get back less than you invested.
Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.
Past performance is not a guide to future performance.
No investment is suitable in all cases and if you have any doubts as to an investment's suitability then you should contact us.
The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.