Attention parents: make sure you use your child’s full Junior ISA allowance and enjoy tax-efficient saving before it’s too late!

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If your child has a Junior ISA, the annual deadline to use their £4,080 allowance is getting closer, so take advantage now. If they don’t currently have a Junior ISA, there is still time to open one and take advantage of its tax efficient allowance before the end of the tax year.

The end of the tax year in April marks the end of your opportunity to take advantage of your annual ISA allowance, but did you know that the same rules apply to the Junior ISA allowance? Remember, if you don’t use your ISA or your child’s Junior ISA allowance in the next few months, it will be lost for good.

A Junior ISA is a tax efficient savings plan for children introduced by the government in November 2011. it can be opened for any child under the age of 18 who does not already have a Child Trust Fund (CTF). In 2015, the amount of children in the UK with a Junior ISA reached over half a million, and the amount of money debited into Junior ISAs hit a substantial £582 million. *

The Junior ISA allowance- use it or lose it!

Much like an adult ISA, there is a limit to how much money can be paid into the Junior ISA each tax year. This year, the amount that can be invested has been set by the government at £4,080. So, if you have not taken full advantage of you child’s allowance by the 5th April 2016, this opportunity for tax-efficient saving will be lost.

For example, if your child has already had £1,000 paid into their Junior ISA in the period from the 6th April 2015, they are now able to have a further £3,080 paid into that account before the end of the tax year on the 5th April 2016. This would take the plan up to the annual allowance of £4,080 for the current tax year.

Recent government announcements have indicated that the £4,080 Junior ISA allowance will remain the same for the 2016/17 tax year.

Once money has been paid into a Junior ISA, it remains tax efficient year after year, right up until the child’s 18th Birthday.  So, it’s definitely worth saving as close to the limit as you can afford before the end of this current tax year, to make the most of the tax benefits offered.

Don’t leave it too late

It will be 5th April before we know it, so make sure you don’t leave using your child’s full Junior ISA allowance to the last minute. Delays can happen, especially towards the end of the tax year, so act now to be sure not to miss the deadline.

Are you interested in opening a Junior ISA for your child?

Junior ISAs offer a tax-efficient means of saving for your child’s future. Whether it’s saving towards university costs, cash for that first car or even help with a deposit on a first property, there is no doubt that a handy nest egg can help give them a real head start.

Why Shepherds Friendly Society?

If you are considering opening a Junior ISA for your child or would like to transfer from your current provider, Shepherds Friendly Society can help. Their Junior ISA plan includes the following benefits:

  • Total flexibility- It’s not uncommon for financial situations to change over the years, so you have the flexibility to adjust your monthly contributions to suit you
  • Anyone can contribute- You or any other family member or friend can make payments into a Shepherds Friendly Society Junior ISA up to the annual allowance
  • Easy to manage premiums- You can choose to contribute as little as £10 a month, or a minimum initial lump sum of £100 followed by further lump sum contributions of any amount over £10
  • They do the work for you- Because the Society will be investing the money in the Junior ISA for you, you won’t have to make any complicated investment decisions. Your child’s money will be invested in the Society’s With Profits Fund, and growth will depend on the performance of the fund
  • The money will be protected- Shepherds Friendly Society is covered by the Financial Services Compensation Scheme (FSCS) up to £75,000
  • Mutual ethos- Shepherds Friendly Society is a mutual society, which means that they have no shareholders to report to and are fully owned by their members. All profits are reinvested back into the Society.
  • Heritage- Having been established in 1826, Shepherds Friendly Society is one of the oldest financial mutual societies in the world. The Society has held the same values, principles and commitment to mutuality and support for its members throughout, setting it apart from some other modern financial institutions.
  • Please remember that the Shepherds Friendly Junior ISA is an investment plan, and bonuses are not guaranteed. Once Shepherds Friendly Society has paid a bonus into the plan they will never take it away, and your child will not get back less than you have paid into the plan.

Once the Junior ISA allowance has been reset on 5th April 2016, there is no way it can be backdated. Try and use as much of the remaining allowance as possible to make sure your child gets the best returns on their money. The deadline is getting closer; don’t delay!

To find out more information about the Junior ISA please visit Shepherds Friendly.

Sources

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/456379/ISA_Statistics_Release_August_2015.pdf