Advice on saving for teenager & protecting our own futures too

DustyBlues

Some basic info : I am a retired, basic rate taxpayer, married with teenager. My spouse earns £60k per year plus car benefit so is higher rate taxpayer. We own our own home in joint names, mortgage free. I also own a couple of BTL’s in my sole name, mortgage free. No credit card or other debts.

• We both have full state pension forecasts
• Spouse contributes £175 pcm to a private DC pension pot currently worth £60,000; plus a works pension started 7 years ago and currently valued at £50,000. He contributes 5%, employer 10%. In good health with no plans to retire early (SPA is 67yrs).
• Spouse also has an Employee Share Plan - £150/month contribution. Employer matches 1 share for every share bought for the first £20 and then 1 share for every 2 shares bought between £20 and £125. This is a 5 year scheme which is due to finish at the end of this year. He had been receiving a dividend for these shares twice a year but this year it will exceed my husband’s tax free allowance.
• Share Save Scheme. Spouse entered into a 3 year plan and save £500 per month with the option to purchase shares.The current saving balance is £13,500, end balance will be £18,000. It is our intention that the majority of this will be used to buy shares for our child to hold in future. All shares currently held in husbands sole name as he’s the employee.
• Spouse has a cash ISA but only £100 in it (only just opened)
• We have saved £32,000 for our child; £12k is in premium bonds in their name; £20k in an ISA paying 4.25% in my name. So I have no capacity for my own savings ‘shelter’. They do not have a JISA so some capacity there?? They have a CTF with less than£500 in.

Now that we are mortgage-free, our priority is to save and invest wisely for our child. I’m sure we could also invest our own savings more wisely….

What should we/shouldn’t we be doing?  All advice welcome - thank you for reading.

jimjames

DustyBlues said:

• We have saved £32,000 for our child; £12k is in premium bonds in their name; £20k in an ISA paying 4.25% in my name. So I have no capacity for my own savings ‘shelter’. They do not have a JISA so some capacity there?? They have a CTF with the original £250 (now £450) in it. 

The ISA limit is £20k per person (adult) per year so when you say you have no capacity have you both added £20k this financial year?

DustyBlues

jimjames said:

DustyBlues said:

• We have saved £32,000 for our child; £12k is in premium bonds in their name; £20k in an ISA paying 4.25% in my name. So I have no capacity for my own savings ‘shelter’. They do not have a JISA so some capacity there?? They have a CTF with the original £250 (now £450) in it. 

The ISA limit is £20k per person (adult) per year so when you say you have no capacity have you both added £20k this financial year?

Only my ISA limit has been used so far, with our child’s savings. But we manage to save £2,000 a month ourselves so that alone will account for the other ISA limit.  So any cash savings we already have, plus dividends  will all attract tax on the interest. We are toying with cashing in the premium bonds into another kind of investment, but unsure of what.

xylophone

You could top up the CTF (to £9000) in the CTF year (birthday to birthday), transfer it to JISA (which fully closes the CTF) and then fully fund the JISA (to £9000) in the current tax year.

https://www.coventrybuildingsociety.co.uk/member/help/savings/my-quick-guide-to-isas/learn-more-about-junior-isas.html#:~:text=What if my child has,take care of the rest.

https://www.theprivateoffice.com/tax-planning/junior-isas

It is possible to transfer a Child Trust Fund across to a Junior ISA.  

After the transfer is complete you will still have your £9,000 annual JISA subscription limit available, even if you have already contributed the annual CTF subscription of £9,000 in to the CTF that tax year, before completing any transfer.  

This provides an excellent opportunity to make a double contribution in the same tax year.

Albermarle

If he can afford it, your spouse could look at upping his pension contributions so that he gets the maximum 40% tax relief.  Currently he seems to pay around £5k pa in total, so he could almost double that.
It also would have the obvious benefit of making his pension pots grow quicker. In reality £110K is relatively modest in pension terms.