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Happy
returns of the year
Cash
Mini ISA Up to £3,000 a year can be sheltered in this
tax-efficient savings account, which is also available to children aged
16 and 17.
Stakeholder pension A contribution
to a stakeholder pension qualifies for basic rate tax relief. You can
currently take out a stakeholder pension in a child’s name from birth
and contribute up to £2,808 net each tax year into the plan. HM Revenue
& Customs will add basic rate tax, which will bring the total
invested annually up to a maximum of £3,600.
Friendly Societies Another
investment choice is a Friendly Society ten-year tax-exempt regular
savings plan. After ten years, returns are tax efficient. The savings
plans also provide life insurance cover. The maximum monthly premium for
each individual is £25 or £270 per annum.
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National
Savings These are regarded as low-risk investments and
opening an account is a simple procedure. The downside to this type of
investment is that, if interest rates remain low over the medium to long
term, the rate of interest paid on some investments may be less than the
rate of inflation.
Unit trusts A unit trust is a
collective investment fund and should be considered as a medium- to
long-term investment of five years and beyond. Unit trusts vary in risk
profile from relatively cautious to highly speculative. Over the medium
to long term, on average they have provided a better return than money
held on deposit, although past performance is not necessarily a guide to
the future.
Levels and bases of, and reliefs
from, taxation are subject to change.
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