You only have until midnight on 5 April to use your ISA allowance, but there is still plenty of time to ensure your savings are working as hard as they possibly can. Here are our 10 top tips for maximising your ISA
After significant lobbying from the financial services industry, in November the government agreed to change the rules to allow the transfer of Child Trust Funds (CTFs) to Junior ISAs (JISAs).
The change is expected to come into effect on 6 April 2015, giving families far greater freedom over how they invest the savings for their children.
Launched in November 2011, Junior ISAs are tax-efficient accounts that, like their more established adult ISA counterparts, shield investments from the taxman. CTFs offered similar tax treatment and investment limits to ISAs, but the number of fund managers prepared to offer the investment vehicles was limited. The problem is that many CTF products often have higher charges, lower interest rates and less choice than their JISA counterparts.
While you can no longer open a CTF for your child, you may continue to add up to £4,000 per annum free of any income or capital gains tax. However, you must remember that the year starts on the child’s birthday and ends the day before their next birthday and should you choose not to use the £4,000 limit in one year you will be unable to carry over the unused amount into the following year. You should also note that the money belongs to the child, but they can’t access the funds until they turn 18. The rules around investment are broadly the same for JISAs, although the tax year runs in line with current dates.
We predict a quite a rush to transfer CTFs monies to Junior ISAs once the rule change becomes more widely known. Savvy parents will want to be able to shop around for the absolute best terms available when it comes to their children’s savings.
Putting money aside for university fees or to help children get a foot on the property ladder is naturally a top priority for parents and watching your child’s savings grow tax-free can give you invaluable peace of mind over your family’s financial future.
The sooner you start saving for your children in a tax-efficient way the better and it couldn’t be easier to find a professional to help you make your wealth work harder for your family. Just complete our smart online tool to start the process of finding and meeting your best-matched wealth managers.