Child Savings Accounts

Child Savings Accounts

Compare UK Savings Options For Children

Regular Savings
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A selection of eight funds to choose from, so you can tailor your child’s investment

Scottish Friendly My Select Junior ISA

Regular Savings
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FREE Children’s ISA Guide. Choose from over 2,500 unit trusts and OEICs from leading fund managers. Invest from £25 per month or lump sums of £100

Hargreaves Lansdown Stocks & Shares Junior ISA

Regular Savings
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Apply online and receive a £30 Amazon e-voucher (T&C’s apply – see OneFamily website for details). The OneFamily Junior ISA helps you to invest for your child’s future. It could help towards going to uni, driving lessons or perhaps helping to pay for a flat of their own

One Family Junior ISA

Regular Savings
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A range of assets including UK and global shares, bonds and cash

Shepherds Friendly Junior ISA

Child Savings Accounts

Compare Child Savings Plans

It’s never too early to start saving for your child’s future.

The different child savings on offer include:

  • Bank or building society savings: For young children, parents can open a savings account on behalf of a child, although there is a potential tax liability on the parent if the interest on the child savings account exceeds £100 per year
  • Investment savings: A number of child savings investment plan providers offer plans which are marketed for children and often pay higher potential returns for regular investment. For the 2018/19 tax year, you can now invest up to £4,260 in a Child ISA

Choose the right child savings plan for your child and start building their financial future today.

Junior ISAs are a tax efficient way for parents to invest and save money with the purpose of giving it to their children when they have grown up.

These kinds of child savings accounts are not available for everyone though, and the eligibility criteria are that the child in question must either be:

  • A child born on the 1st of January 2011 or at any point after that date
  • Someone who is under 18 but was born before September 2002

The limit on these kinds of child savings accounts is £4,260 for the 2018/19 tax year, which is held in the child’s name and for the most part is tax free. While parents manage the account until the child is 16, they cannot withdraw any of the money during this period.

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When trying to save money for the future, there are several options open to cash savers. Options include instant access savings accounts, easy access savings accounts, notice savings accounts, fixed rate bonds and structured deposit plans.

With interest rates at the time of writing at all time lows many savers are looking for a range of best saving plans. For savers who are prepared to tie up capital for a year or more typically higher rates of interest are available from savings providers.

A fixed rate bond is a way of gaining a fixed rate of higher interest on your savings for a fixed period of time, typically between one and five years. Generally speaking the longer your savings can be locked away, the higher the interest rate you can get on your money. Some providers offer fixed rate bonds within a Cash ISA so you benefit from tax free interest returns.

Providers normally have a minimum subscription age of 18 but some providers offer options to younger savers.

Normally there is a minimum commitment for depositing money into a fixed rate bond – usually around £1,000, but this can be more. This makes bonds unsuitable for those who wish to top up a savings account in small increments, as this is not usually possible beyond the first lump sum, therefore could look into alternative savings and investments plans.

Having a fixed term means that bonds have a maturity date at which time you will be contacted by your savings provider and provided with options on how you wish your money to be returned to you – you may be given options of putting the money into a new account in which case you should always shop around before accepting a savings deal offered by an existing provider as the rate of interest may or may not be competitive.

Product providers do not normally allow you to access your money during the term and if they do there are normally conditions which may involve a loss of interest so ensure you read the small print before you sign up. Some fixed interest providers will allow one withdrawal a year without penalties.

Interest paid on your savings is treated as income and you may have to pay tax on it depending on your circumstances. If you don’t pay tax you can receive interest gross if you complete HMRC tax form R85. Some accounts will pay interest gross and it is up to you to declare any tax owed to the Inland Revenue.

Fixed rate bonds are cash deposit based and you will get back your original deposit plus any interest owed unless the bank or building society gets into serious financial difficulty. In the unlikely event that this happens the Financial Services Compensation Scheme would pay compensation of up to £85,000 per account holder per authorised institution.

The length of time that savers choose to deposit their money depends on personal financial time frames and other budget and savings considerations. If you need rapid access to your cash, bonds are possibly not the best savings option – it might be preferable to look at an alternative savings options or just an instant access savings accounts.

Minimum deposits can vary from £500 to over £2000. Make sure that you are happy to part with that amount of money for a longer period of time! It is worthwhile having a five-year plan of projected expenses – such as mortgages, car purchases, or planning for a family or retirement – to ensure that you will not need access to your fixed rate bonds account.

Withdrawals are either not permitted or restrictions will apply. Read the provider terms and conditions so that you know what you are getting into. Some providers for example will allow one withdrawal during the term without penalties.

The payment of interest can also vary- some offer monthly interest, others quarterly or annually, and some only pay at the end of the agreed term. Choose a product that fits in with your requirements for the best rates of high interest.

Tax is payable on interest accrued unless you are a non tax payer in which case you can receive interest gross if you complete HMRC tax form R85. Alternatively it is often possible to take a Cash ISA fixed rate bond (current cash ISA allowance for 2018/19 is £20,000 per individual) from which interest can be taken tax free.

If you have cash ISAs from previous tax years you may be able to transfer to a new Cash ISA provider offering a fixed rate bond cash ISA deal.

Please note that this information is based on current law and practice which may change at any time.

1. Consider all options – from instant access to fixed rate bonds to instant access options – All have advantages and disadvantages when trying to build a nest egg for the future.

2. Check the market – shop around to find the right savings plan for you. Interest rates are changing all the time and deals come and go on a regular basis.

3. Make sure you find a product that works for you –  The choice of bond is dependent on the amount of money you intend to deposit, the fixed rate, and the length of the fixed rate period. Whether you want the account to be operated on an online account basis, postal basis or telephone basis. These should all be taken into consideration before making your choice. Read the savings provider terms and conditions carefully.

4. Read the fine print – determine when the provider is likely to let you access your money, how much notice is required, and if there are any penalties for requesting access before the bond matures.

5. Some deals require you to have the interest paid into a current account – check the small print.

6. Check the small print on how interest is paid –  If monthly or annually this will be need to be declared if you submit a tax return. If interest is paid on maturity this may be useful for tax planning purposes.

7. Many deals require you to have internet access –  Some are offered on a postal or branch basis – check the small print.

8. Check that your money is covered by the Financial Services Compensation Scheme – they will guarantee £75,000 of savings against institutional failure. Most UK banks should have this cover, but Irish banks that do not have a UK arm may not be covered by the FSCS.

9. Check what happens when your savings product matures – Providers will write to you when your account matures; if you do not respond the provider will often put your savings into a low or no interest holding account until you provide instructions on what you want to do with the money. It is therefore important to diarise the maturity of your bond and have in mind what you want to do with the money.

10. What is the tax treatment if you are a non taxpayer – If you are not a tax payer many providers will pay interest gross on submission of the relevant HMRC tax form.

 

 

 

 

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.