Gifts of money are often considered for our children and grandchildren and there are a number of investment options you could consider, each with their own set of benefits and drawbacks:
Junior ISA (JISA)
- Invest up to £9,000 for the 2020/21 tax year
- Available from birth
- Tax free growth
- Access from age 18
Premium Bonds
- Chance to win cash prizes (paid to parent)
- Invest from as little as £25 to a maximum of £50,000
- Child can access from age 16
Pension
- Invest up to £3,600 gross per annum (£2,880 net) each tax year
- Amount falls within annual gift allowance
- Tax Free Growth
- Access at retirement (currently 55)
- Encourages saving habit for the future
Cash
- Access at any time
- No limits on gift amount (larger gifts may be subject to Inheritance Tax)
Trust
- Access is ‘gated’ by trustees
- No limits on gift amount (large amounts may be subject to Inheritance Tax)
- Can be accessed at any time for the benefit of the child(ren) (for example for education fees)
Whilst cash might be top of the wish list for many children, these alternatives might just help have a longer term benefit and/or encourage good money habits.
For more information
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