education continues to grab the headlines and presents a real challenge . The National Union of Students estimates that those who choose higher education will graduate with debts of £ 35,000- £ 40,000 in student loans ( source www . university . which . co . uk , 17 Feb 2015 ).
And the financial challenges keep coming for the younger generation . According to a recent report , the average cost of a deposit on a house for a first-time buyer is now over £ 42,500 and , unsurprisingly , the average age for a first-time buyer is now 31 ( www . thesundaytimes . co . uk , 14th June 2015 ) - that isn ’ t an appealing prospect for children or their parents ! Without a helping hand , your children ’ s hopes and dreams may remain just that ; but with sensible financial planning you can help make them a reality .
The Junior Individual Savings Account ( JISA ) is a tax-efficient savings vehicle aimed to provide parents , grandparents , friends and relatives with the opportunity and encouragement to build a capital sum for the benefit of their loved ones .
The JISA is available to all UKresident children under the age of 18 who do not have a Child Trust Fund ( CTF ). The rules and regulations governing JISAs are based on those for a standard ISA . From 6 April 2015 , any CTF can be transferred into a Junior ISA Both stocks and shares and cash JISAs are available and children are able to hold one of each account at a time . The current maximum annual contribution limit ( combined across both accounts ) is £ 4,080 a year per child . This can be shared between a Stocks & Shares Junior ISA and a Cash Junior ISA ; in any proportion . The maximum contribution increases with inflation each year .
JISAs also benefit from the same tax advantages as ISA ’ s – taxfree interest on cash deposits , no further liability to income tax on dividends and no capital gains tax . Significantly , the accounts will be owned by the child but the funds will be locked in until the child turns 18 . Rather than pay out at that point , JISAs will roll over into standard ISAs , hopefully encouraging the same saving discipline into the future .
The government-set contribution limits are intended to encourage all families to save for their children ’ s future , although the relatively low annual limit may still prove beyond the means of many parents , particularly in these austere times . But help is potentially at hand . Whilst a JISA has to be set up by a parent or guardian , the rules allow contributions from any source . It is often grandparents who are in a position to lead the way in saving for children , possibly as part of their own plans to mitigate inheritance tax . And it should also be remembered that other relatives , godparents and family friends can also make a donation towards this valuable allowance .
JISAs , clearly , have a number of valuable tax advantages but they are by no means the only solution for saving on behalf of your children . For larger sums , or to retain a greater level of control , the use of trusts provides greater flexibility whilst still offering the potential to make significant tax savings . However you want to invest , you need to choose a simple , flexible solution that gives you every chance of success in providing that vital helping hand to your children in the future .
To receive a complimentary guide covering wealth management , retirement planning or Inheritance Tax planning , please contact Paul Brady on 0121 355 2473 or email paul . brady @ sjpp . co . uk .
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