There are enough austerity measures hitting our pockets without needlessly giving away thousands to the taxman. An adult can shelter up to £10,680 in a stocks and shares ISA and children up to £3600. This means that a family of four can keep a whopping £28,560 out of the clutches of the tax-man if they have acted before the 5th April.
Billions of pounds a year just end up with the Revenue simply because people do not use the allowances to which they are entitled. That figure is likely to grow if people do not take advantage of the extra £3600 available for each child in a Junior ISA.
Whilst money is tight for many of us, a Junior ISA can be opened by a child’s parents, but anyone can contribute money into it. Many parents with older children who were given up to £500 by the Government to start a Child Trust Fund are asking friends and family to contribute to a Junior ISA for their younger child to give them the same start in life. This is becoming popular as an alternative to the traditional christening gifts and is often more welcome than the ten tooth fairy jars – especially with the chance of a higher return than a pound under the pillow!
|Account name||Initial fee||Management fee||Minimum deposit||Product review|
|Prudential Child ISA||2.00%||1.50%||£50 per month or £500 lump||Yes|
- One of the UK’s largest asset managers
- Defensive, Balanced and Adventurous funds
- IPad2 Competition – a prize draw to win a IPad2
- Small initial fee
The money in the account belongs to the child and can’t be taken out until they are 18 after which time the child has the option to cash in the investment or transfer to an adult ISA. Many parents prefer this as they know the money will be definitely be available when the child reaches maturity and avoids any possibility of the money being used for other things in the meantime, especially if there is debt to be cleared or an alternative to a loan.
There are some parents who are uncomfortable with the concept of the child being able to access the money at age 18 and do whatever they want with it without parental consent. For those parents who would prefer to keep control of the funds, they can open an Adult ISA, utilising the same investment choices. This will mean that the £3600 tax break available through investing in a Junior ISA is lost to them, but if they are not utilising the maximum savings limit of £10,680 for each adult, then this may be more preferable.
So, whichever option you favour, make sure to act before the 5th April before the taxman gets his hands on more of your children’s future!