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Planning for a Bright Future


With many of us living longer, you may be thinking about how you can support your family at the moments that matter. Sharing your wealth during your lifetime – especially with younger generations facing the pressures of rising house prices and university fees – can really make a difference and bring you great joy too.


With today’s youngsters needing thousands of pounds to get them on to the property ladder, a financial gift that will help is well worth considering. As with all investing, the earlier you start, the better. And even saving a relatively modest sum each month can be very effective over the long term.


There’s a simple starting point after you’ve worked out what you can afford to give. What is it that your children or grandchildren actually need and when do they need it? Making a gift at the earliest possible time means that any potential investment growth can play a big part in meeting a future cost. Below is a selection of different options that you could consider:


Junior Individual Savings Account (JISA)

A JISA is a tax-efficient children’s savings account where you can make contributions on the child’s behalf. Any gains do not incur Capital Gains Tax, and they will not be considered part of the parents’ or grandparents’ estate for Inheritance Tax purposes. The child will automatically get access to the money when they turn 18 and can choose what to do with it.


Lifetime ISA (LISA)

If your children or grandchildren are 18 or older but under 40, a Lifetime ISA (Individual Savings Account) could help them save for their first property or save for later life. A total of up to £4,000 each year can be put in, until they’re 50. The government will add a 25% bonus to their savings, up to a maximum of £1,000 per year. Money can be withdrawn from their ISA if they’re buying their first home or aged 60 or over.


Junior SIPP (Self-Invested Personal Pension)

A Junior SIPP is a tax-efficient way to start building a nest egg for your child or grandchild. Any parent or grandparent of a child under the age of 18 can help them kickstart their retirement savings. Children’s pensions benefit from the same advantages as adult pensions. That means no tax is payable on income from investments or capital growth in the pension, provided they remain within the annual and lifetime allowances.


Investment Account

For tax reasons, this approach may be best suited to grandparents. Grandparents can set up a designated account for a grandchild and invest a capital sum in it. The grandchild’s initials are put in the designation box when the account is set up, creating a bare trust. As a result, the taxman will view income and gains from the investment as being attributed to the minor, who will have their own Income Tax and Capital Gains Tax allowance, so there will be no tax implications for grandparents.


To find out more about any of these options or any other financial planning needs you may have, please contact me at nkidby@chilternconsultancyltd.com or call 07774 264356.

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