Investing for nephew - tax free options - pension - etc.

EggMella

All,

I've got about £1,000 that I want to invest for my nephew that I will be adding a small amount to on a month basis. What's the best way to invest this for him.... I'm wondering whether i should be looking at bonds but I've heard mention that I can invest in a pension which means it's tax free etc. etc.

jem16

Using a pension would mean he can't access it until he's 55 (may change in the future) - is that what you want?

Not many tax-free options unless he's over 16 (for cash ISA) or 18(for S&S ISA). If it's for a long term use unit trusts. Cash wise it could go into a Children's Regular saver and would not be liable for tax if his total income (including savings interest) was less than the personal allowance.

Lokolo

If you put it in a pension they won't have access to it until they retire... which is a LONG way away (unless your newphew is like 40.. lol).

edit - damn you jen, damn you.

dunstonh

pensions are for providing an income in retirement. They are very good at that. However, they are not designed for capital provision (ignoring the 25% tax free cash as thats a small allowance). Nothing conventional beats a pension for income provision but just about everything else will beat a pension for capital provision.

So, how do you want the maturity proceeds to be paid?
Are you using a record of a gift for IHT purposes?
Are you placing it in trust to him?

EggMella

The intention is ensure whatever money we contribute is maximised most effectively later on

I do recognise that the long-term nature of a pension may not be appealing to him when he turns 18 but would it be as he gets older? Would it help to bring forward his retirement date or would it mean he has to worry less about what he contributes when he starts work...

tbh I don't mind whether he gets it when he turns 18 or 55 so long as we're able to make the "biggest" impact with that money (I know I'm using wooly terms here).

We have a fixed amount of money that we will contribute to him over the next 18 years. How do we make sure that he gets the most benefit from that. I know things like first car, college etc. could come into play but people generally manage to take care of those things somehow anyway...

edit: to add I may need to do more research and then come back and ask this question when I'm more clued up but in answer to these questions.....
So, how do you want the maturity proceeds to be paid?
I don't mind.... which is the most effective way?
Are you using a record of a gift for IHT purposes?
I hadn't looked into this or considered IHT law tbh
Are you placing it in trust to him?
What advantages does this have I assume tax?