21:02 07 September 2016
Myth no 1 – Children don’t pay taxes
This may surprise many but children have to pay taxes -- but only if they earn above their personal allowance. The standard personal allowance is currently £11,000. This means that if they earn interest more than £11,000 in the current tax year, they will be subjected to tax.
Myth no 2 – Children can’t have a pension
Children can have a pension and you can start saving into a Junior SIPP as soon as your child or grandchild is born. Each child can have a total of £3,600 a year. The government automatically tops up any payment by 20per cent.
Myth no 3 – Giving money to your grandchildren means paying tax
Only parents who save or invest money on their children’s behalf are subjected to tax. This rule does not apply to grandparents and even aunts and godparents.
Myth no 4 – Your child can’t get their hands on the money
JISA and CTF are automatically rolled over into an adult ISA when your child turns 18 years old.
Myth no 5 – JISA has to be cashed in when they turned 18
JISA is automatically converted into an adult ISA when the child turns 18. They will then be free to fully invest in a regular stock and shares ISA as well as adding to anything they hold in a cash ISA.
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