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Child Trust Fund (CTF)

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Children Tax Exempt Savings Plans (TESPs)


There is an inherent injustice to the Child Trust Funds (CTFs) in that children born before September 2002 are automatically disqualified from the free £250 voucher.

Research commissioned by the Building Societies Association shows that 11m children who missed out on the CTF vouchers will turn 18 between now and 2021. Of these, a third will not have a savings account, meaning 3.7m children are likely to start adulthood with little or nothing to their name.

However, there are alternatives to the CTF which are just as tax efficient and but without the initial £250. One of the best ways to do this is the tax-exempt savings plans (TESPs) from friendly societies. TESPs offer parents a simple way to save up to £25 for each family member per month in addition to, or instead of, a CTF.

TESPs can help you build up a lump sum for any child through small regular payments. You choose when the money is available for them, but the policy must run until they’re at least 16 and run for a minimum of 10 years.

Under current tax laws, TESPs invest your money in a fund that grows free of any income or capital gains tax AND the lump sum the child receives will be free of personal income and capital gains tax.

TESPs are available for every member of the household so a family of four could save up to £100 a month tax-free and, provided the TESPs have been set up in the parent's names, the money remains firmly under their control. In addition, the flexibility of TESPs mean that they can be set up to mature at different points in a child's life.

Providers with Children Tax Exempt Savings Plans (TESPs)

Scottish Friendly Society Child Bond
The Child Bond is a specially designed tax-free with-profits savings plan which runs for a minimum of 10 years. Under current law (which might change in the future) this gives it two valuable tax benefits:

Click here for more information.

MyEggNest's Reviews on Scottish Friendly Child Bond

"The account is easily manageable and information sent regularly so I can keep an eye on my daughters account. I have not put any of my own money into the account as we have another account for her with another bank which is more easily accessible for me and my family." Full Details

Write a review and receive a Free Gift

Witan Investment's Jump Savings 
Jump Savings is for parents with older children who don’t qualify for the government Child Trust Fund (CTF) voucher or for parents who would prefer more investment flexibility than the CTF allows.  You can start investing for a quarter of the price of a glitzy pair of trainers – £25 is all it takes to start, per month or quarter, or you can choose to begin saving with a £100 lump sum.  

Click here for more information 

Write a review and receive a Free Gift

Caution- These plans is invested in shares, so in common with other investments of this type its value can fall as well as rise and it is possible to get back less than was paid in. 

Other ways to save for your children:

National Savings and Investments (NS&I)

Premium bonds

Children's Bank and Building Society Accounts

Children's Stakeholder Pensions

Individual Saving Accounts (ISA)

Children's Bonds

Unit Trusts for Children

Forum

Join in the Tax-Exempt Savings Plan (TESPs) discussion Forum

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MyEggNest's Recommendations

Alternatives to CTFs - Tax-Exempt Savings Plans
Did you know there are alternatives to the CTF that offer the same tax-free savings? Tax-Exempt Savings Plans (TESPs) can help you build up a lump sum for your child through small, regular payments. Your fund grows free from any income or capital gains tax, and can be used to save for children of all ages. Click here for more information about TESPs, and specific plans offered by friendly societies. 


 

 

Radcliffe & Newlands
Lump Sum Investments

Puzzled by lump sum investing? Get help from qualified investment professionals. Click here for more information.

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Interesting Fact
Alternative to CTFs

Were your children born before Sept. 2002 and subsequently miss out on the government's £250 voucher to jump start their Child Trust Fund?  Not all is bleak!  there are many alternatives to the CTF which are just as tax efficient and but without the initial £250. Below are just a few examples of how you can save for your children if they do qualify for the Child Trust Fund.

Unit Trusts for Children

Whatever your children or grandchildren dream of doing when they grow up, why not indulge more than their imagination?

Whether they want to travel the world or step onto the first rung of the property ladder, fund their way through university or organise the wedding of their dreams, you can give them a great start in life by investing for their future with a Legal & General unit trust.

And whether you have a little to invest or a lot, if you start now you could begin to grow a fund that will help you give your child a great financial start in life.

Legal and General's Investing for children

Providers with Unit Trusts for Children
Family Investments Children's Unit Trust

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Children's Stakeholder Pensions

You can now save towards your children's retirement with a Children's Stakeholder Pension in your children's name. This is a government backed scheme where you can invest up to £2,808 each year, net of tax, and the Inland Revenue will add 22% basic rate tax relief to this, bringing the total amount invested up to a maximum of £3,600 a year.

By starting a Children's Stakeholder Pension young, your children's pension pot will have a huge boost in comparison to those who waited until their working lives to begin paying towards a pension.

A contributions of £3,600 per annum between ages of 0 - 16 yrs (and then stopped) could leave your child with a potential pension fund value of £1,230,000 at age 60 (these projections are based on a medium growth rate of 7% with an Annual Management Charge of 1%, courtesy of Axa Sun Life).

Contact Steve Weisner - Senior Independent Financial Adviser - at Radcliffe Newlands on 0845 0217000 or Email Steve where he'll be happy to answer all your Children's Pension questions- Please mention MyEggNest


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Request a Jump CTF or Jump Savings Brochure and receive a free copy of Money: Your Children, Their Future by Sarah Hamilton. Click here for more information.

Read Jump Savings Reviews Here