April will mark the start of the new tax year and that brings great news as the annual tax-free ISA allowance starts again and it’s not just adults who can benefit. As parents, grandparents or guardians are you aware of the products, such as a Junior ISA, available to provide a tax-free nest egg for your younger family members in the future.
The Junior ISA is aimed at encouraging long-term tax-free savings. They can be opened on behalf of anyone who is under 18 and a UK resident. The annual contribution limit for 2019/20 tax year is £4,368 (this may be increased for the 2020/21 tax year in the Budget on the 11th March) and can be funded by anyone. There will be no tax to pay on any interest, dividends or gains. Providing the overall annual contribution limit is not exceeded, the child can invest in cash, stocks and shares or both.
The Junior ISA must be opened by either a parent or guardian with parental responsibilities who can manage the account on behalf of the child. The child can take control of the account at age 16 if it is invested in cash, but can’t withdraw the funds until they reach age 18. If they decide to leave it invested, it will automatically become an Adult ISA.
Whether it’s funding further education, buying their first car or as a deposit on the their first home, taking out a Junior ISA today could make a world of difference to your children or grandchildren in years to come.
If you would like to discuss Junior ISA’s, ISA’s in general any other financial planning matter, please do not hesitate to contact us on 0114 2588899 or email firstname.lastname@example.org. Our Independent Financial Advisers are qualified to provide advice in the areas of retirement planning, tax planning, savings, inheritance tax, investments and protection.
Source: Chris Sadler, Independent Financial Adviser at Fogwill & Jones Asset Management Limited.