Yes, giving your child what they want for their birthday or another occasion is one of the greatest joys life has to offer. But what if all they want is a pack of Pokémon stickers? What will you do with the rest of the money you set aside for their Yuletide joy? Or maybe they’re the type to love a toy intensely, only for you to find it in the kitchen bin two days later. Is there a more constructive way to give?
Well yes, there is. With the cost of living seemingly rising inexorably up, and with university fees and house deposits going up with them (and pension annuities down) it could be that the best gift you can give is contributing to some sort of long-term savings fund. They may not appreciate it now, but they’ll thank you when faced with a student loan statement and a mortgage.
Junior ISAs are very similar to adult ISAs in that they offer a tax-free wrapper for savings and investments that can be topped up by a specified maximum every year.
But whereas an adult ISA has separate fixed allowances for stocks & shares and cash, a Junior ISA has a single allowance – currently £3,720 – that can be all cash, all investments, or any mix between the two. All interest and profits are completely free of income tax and capital gains tax, making it the most tax-efficient way of building a nest egg for your child. Continue reading