Christmas is around the corner and adverts for toys and gadgets are everywhere. Have you thought of making Christmas financial gifts of an investment to your children or grandchildren that has longer-term value?
Instead of something they soon outgrow or forget, you could choose any of the following as Christmas financial gifts:
- Junior ISAs (JISAs), which have a maximum overall investment of £4,368 in 2019/20 for each child. JISAs make great gifts because they escape tax on investment income and capital gains, as well as the anti-avoidance rules on parental gifts to minor children.
- A personal pension grows free of capital gains tax and there’s no income tax until benefits are drawn. The maximum net investment/gift in a tax year is £2,880, which tax relief boosts by 20% to £3,600.
- Investment funds can be gifted to children, typically by creating a bare trust, although other routes are possible. There are no limits on the amount you can gift, but there are potential income tax and inheritance tax consequences that need to be kept under review, particularly for larger investments.
Deciding which investment(s) are most appropriate, and how to structure them, depends on a range of factors. Tax is the obvious one, but so too is the amount of control you want to exercise. For a discussion of your options for making gifts, talk to us soon – it’s that time of year.
For more information on all the options for children’s investments, do get in touch – this is an area with some tricky tax traps for the unwary. See our excellent Key Guide ‘Investing for Children’, for a more detailed look at your options:
Please contact us for help and independent Savings and Investment advice.
Please Note: The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax or trust advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
