The Mail on Sunday - 2021-11-21


The alternatives to a Junior Isa


YOUR OWN ISA ALLOWANCE SOME parents and grandparents may not feel that an 18-year-old is ready to take responsibility for their Junior Isa when it matures. In this case, they could consider using some of their own Isa allowance to save for the young person instead, assuming they are not already using the full £20,000 allowance for themselves. A BARE TRUST GRANDPARENTS can also use a bare trust, which is a legal arrangement where money is held by grandparents for the benefit of grandchildren. The money can then be used for the child’s benefit before the age of 18 – for example, for music lessons or school fees – but the child takes control of the money when they turn 18. Grandparents can find that trusts are tax efficient as any income taken from them is treated as the child’s rather than their own. The same benefit does not apply to parents. A PENSION IF YOU do not want a child to have control of their savings at 18, you can set up a pension for them that they will not be able to access until their late 50s at the earliest. You can invest £2,880 each year into a child’s pension, and the Government will top this up with tax relief to £3,600. Thanks to the miracle of compounding over time, this early investment could be extremely valuable for a child in the future.


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