Children's savings and tax

marysmarket

Hello
Clueless here but need to get myself in order. I'm in the "60% bracket" and need to begin saving for my child.

Junior ISA or normal kids saving account? Which one to go for first?

Thanks in advance.

eskbanker

Junior ISA is normally the rule of thumb, given the tax advantages, but it'll probably depend on how much money over what period.

refluxer

Once the interest a child earns from money given to them by a parent reaches £100 then the whole lot will fall under the parent's PSA and therefore interest earned beyond your PSA will be taxed at your rate.

See no.7 here : https://www.moneysavingexpert.com/savings/child-savings-tax-free/

If interest earned from the money you give them is likely to exceed this £100 limit at some stage (it's actually £100 per parent) then, as suggested above, a Junior ISA would be the only way of avoiding this potential tax issue.

The downside to a Junior ISA is that the money is inaccessible until the child reaches the age of 18. They can control the account once they reach the age of 16 and, as the money is legally theirs, they can do what they like with it once they become 18.

MSE's guide to JISAs is worth a read : https://www.moneysavingexpert.com/savings/junior-isa/

MX5huggy

Are you filling both your own ISA and putting loads in your pension. Only after this would I consider significant saving in a JISA. 

TheSpectator

And neither an ISA or JISA will help you out of the '60% tax trap'.

marysmarket

MX5huggy said:

Are you filling both your own ISA and putting loads in your pension. Only after this would I consider significant saving in a JISA. 

Yes my plan is to max out my own ISA and look into a Stocks and Shares ISA.

Regarding additional payments into my pension, I have an NHS pension now following nearly two decades of opting out (don't ask!). Perhaps that should be my priority?

marysmarket

TheSpectator said:

And neither an ISA or JISA will help you out of the '60% tax trap'.

What will then? Suppose it's back to the issue or overpaying into my pension?

artyboy

marysmarket said:

MX5huggy said:

Are you filling both your own ISA and putting loads in your pension. Only after this would I consider significant saving in a JISA. 

Yes my plan is to max out my own ISA and look into a Stocks and Shares ISA.

Regarding additional payments into my pension, I have an NHS pension now following nearly two decades of opting out (don't ask!). Perhaps that should be my priority?

If you have an NHS pension and still have taxable income over £100k then it would seem a no brainer to top that up as much as possible (I'm not an expert on the mechanics there). Or failing that, open an additional SIPP to pay into to at least get you under the 62% tax mark (don't forget that extra 2% NI...)

MX5huggy

marysmarket said:

MX5huggy said:

Are you filling both your own ISA and putting loads in your pension. Only after this would I consider significant saving in a JISA. 

Yes my plan is to max out my own ISA and look into a Stocks and Shares ISA.

Regarding additional payments into my pension, I have an NHS pension now following nearly two decades of opting out (don't ask!). Perhaps that should be my priority?

You have a a £20k ISA allowance each year you can’t “max out” your presumably cash ISA and invest in a Stocks and shares ISA. 

Yes you need to make up for lost ground on the pension. Pension is going to be the best way to save you can then choose to give money to your kids rather than them having money to blow on what they like while you work on past 60 making up for lost years of pension contributions. Start a new thread on the pension board to explore your options around SIPP’s or additional NHS pension contributions.