When you have children and grandchildren there always seems
to be something that needs to be paid out for!
Whether setting them up for university, buying their first house, or
even their wedding day.
It’s a good idea to save small amounts over time for those big occasions that creep up on you. There are lots of options available now, with some new, so here’s a summary, to start you thinking about what might suit you and your child best.
All children’s savings accounts follow the normal tax allowance guidelines, so for the year 2016/17 your child, like most of us, has an income tax free allowance of £11,000. But, the £100 Rule states that any income exceeding £100, resulting from an asset given by a parent to a child, will be taxed at the parent’s normal tax rate. This is true for most children’s savings accounts, with the exception of a JISA which remains tax free.
The good news is that income generated from assets from grandparents are tax free, so wherever possible, this is the best way to hand money down the generations.
Regular Savings Account
Upon choosing a savings account for your child you will have to decide if you want to save in cash or stocks and shares. A lot of people choose to invest in cash as it is the “safest” option, however, due to low interest rates you could technically be losing money every year. Although stocks and shares is considered the more dangerous route it does provide you with the opportunity to grow your money faster! A wise strategy is to invest in each to spread your risk.
If you want to maximise the return on investments for your child or have a substantial amount to invest then it is important to take advice. Our clients get access to a free consultation with a friendly independent financial advisor as the starting point for their decisions.
Contact me if you are a business owner looking for an accountant that provides services which support your business and your personal goals. In a complimentary 45 minute meeting we can establish your priorities and explain how BusinessHeads can help.
All details above were correct at the time of publishing - for more up to date information please
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