Do you know the best savings options for children?
• Junior self-invested personal pensions (Sipps): Anyone can contribute £3,600 to a pension per year, even if they have no earnings. This money gets the usual 20p% tax relief, meaning up to £2,880 can be contributed; the tax relief comes in at £720. Savings are tied up until the child reaches 55 (under current legislation). So it may be better to invest in a Junior ISA first then put any further savings in the pension.
• Your own ISA: If you aren’t using your full ISA allowance each year, you can invest in it for your children. The limit for this tax year is £20,000. Investing the money through your own ISA gives parents control over the money even when the child reaches 18.
As each person’s financial situation is unique, it might be worth considering speaking to an Independent Financial Adviser to find out what is best for you.