Farley And Partners

Planning strategies

A debt free start for your children

For younger children, ongoing payments into a Junior ISA may create the opportunity for parents, grandparents and other family members to build a fund to help offset university expenses and minimise debt at the start of your child’s working life.

Remember that all children have their own personal allowances meaning that their income up to that personal allowance escapes tax this year provided the capital does not originate from parental gifts. If income arising on parental gifts exceeds say D100, the parent is taxed on it unless the child has reached 18, or is married. Thus parental gifts in excess of the required limit should perhaps be invested in something which produces tax-free income, or which accumulate income, or in a Junior ISA. The D100 limit on income does not apply to income on gifts into a Children’s Savings Account.

National Savings Children’s Bond

Income from capital gifted by grandparents or other relatives is taxed as the child’s, as will income distributions from a trust funded by such capital.

Contact us if you are not sure which course to take.

In particular, the potential tax burden on the disposal of the former marital home as a result of separation and divorce can be significant, and may be something about which you need specific advice.

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