ISAs for Multiple Kids

jingo_man

If I used JISA's, I could setup 1 JISA per child, named to themselves and making regular payments into them.

But I do not like some aspects of the JISA system (namely full control at 16 / 18), so I am looking at the alternative of placing into my own ISA.

But this would be 1 pot, not per child. Is there a way to still setup individual accounts? I thought I am only allowed 1 active ISA per type at a time, and I would prefer these savings to be long-term Stocks & Shares ISAs. Is this correct?

Or is the only option to have a single pot and have my own calculation as to how much each child should / would get? They are only a couple years apart, but in time, I may want to show each of them their figure as part of learning the value of money, have some top-up scheme for each with their pocket money or something, etc. I guess 1 pot simplifies a lot of things, on the other hand...

Thanks

xylophone

A cash JISA for each child into which modest gifts from you/relations can be made?

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

A stocks and shares ISA for you which you can use as you wish at the appropriate time?

jingo_man

@xylophone, sorry this doesn't really answer the question

xylophone

It would appear that you do not wish your children to have access to a very large lump sum at age 18.

However, you would like to show them their individual savings.

If each child has a cash JISA, then gifts from relations to the child (which belong absolutely to the child) and are presumably relatively modest) and birthday/Christmas cash from you could be paid in as required - the interest rate on the Coventry JISA is (at the moment) keeping up with inflation.

You might aim at a modest cash sum in each JISA for the child to use as he wishes at age age 18.

You might invest as much as you can afford into your own ISA on the basis that you think of this as "earmarked" for your children, perhaps as a house deposit for each at some point in the future.

However, you would have no obligation ever to gift to your children if you chose not to as the asset remains yours throughout.

bowlhead99

jingo_man wrote: »

so I am looking at the alternative of placing into my own ISA.

But this would be 1 pot, not per child. Is there a way to still setup individual accounts? I thought I am only allowed 1 active ISA per type at a time, and I would prefer these savings to be long-term Stocks & Shares ISAs. Is this correct?

Correct, if you want to do it in your own name you can only have one ISA per type receiving new money in a year.

If the children have another parent, that's two between the two of you, which could be fine if you only have two kids. But if you ignore the opportunity to open personal S&S JISAs for your kids and instead you're blowing your own S&S ISA allowances on those kids' nest eggs... then you won't be able to do any of your own investing in S&S ISAs for yourself - because of the aforementioned problem of only having one ISA per type receiving new money each year. Assuming you don't want to mix your money with theirs. You're wasting your own capacity to invest tax-efficiently.

That's if you don't want to mix your assets with the kids because of it being a headache to maintain annoying separate calculations. Even if you have a maths brain and an appetite to maintain your own backed-up records for 10+years... frankly it's easier to show them how *they* are growing their money if they can literally see a pot of money on a statement for the account which is wholly theirs, and doesn't contain your money or their brother's money etc.

If you want multiple accounts (not co-mingled with your own tax efficient accounts) you can consider investing in tax-inefficient accounts instead, split across you and the other parent's names. For example, where their investments are not generating enough investment income to pay tax on (within your/ the other parent's dividend and interest allowances) and not likely to be generating enough capital gains to pay capital gains tax on (in excess of ~£12k realised gains per year for each of you and the other parent), there may not really be a tax 'problem' that you need to bother jumping through hoops to use tax wrappers like ISAs and pensions or JISAs. Instead you could just get a couple of unwrapped general investment accounts, and not worry about the minimal amount of tax. Obviously depends how much you are investing.

Or is the only option to have a single pot and have my own calculation as to how much each child should / would get? They are only a couple years apart, but in time, I may want to show each of them their figure as part of learning the value of money, have some top-up scheme for each with their pocket money or something, etc. I guess 1 pot simplifies a lot of things, on the other hand...

I have the investments for my nephew and nieces in one (unwrapped) pot and have decided a fixed percentage split between them. That wouldn't be very convenient if I was going to let them throw their own money into the pot periodically because the ratio would be always changing. So separate accounts would be better, but I don't let them put their own money in. If they have spare money they can put it in savings.

The real advantage of having one account with some notional split in your own records, instead of two separate accounts, is economies of scale if you're buying investments from a provider which charges transaction fees. If you went with multiple accounts to accommodate your multiple kids, especially if dripping in money each month, best to find one that doesn't bill you for each individual transaction.

Flobberchops

Either, bite the bullet and just do JISAs.



Or, open some "pocket money" JISAs that they are aware of and can access at 18, but keep the majority of their money hidden and under your sole control. This is what I'm personally doing.


Another option would be to save entirely within your own ISA allowance, but invest in different funds or self-select shares for each child, so you can easily calculate who owns what. It could throw up a sticky situation if Child A's funds crash and burn while Child B doubles their money, but that could be a valuable life lesson in itself?


Or otherwise just have everything in one mixed pot, and run a spreadsheet to keep track of each child's percentage of each holding.

Alexland

If they are different ages then, assuming you are on a platform with no trade fees, consider investing in different target date funds in the same adult S&S ISA wrapper.

The funds will then automatically reduce volatility as the target withdrawal date (e.g. 18 for university, 25 for a house deposit, etc) approaches. It will however result in them receiving slightly different amounts.

You might consider using low cost VTR (ignore the word 'retirement') funds in a Vanguard ISA

https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

Alex