When Christmas comes around it is hard to ignore the amount of waste coming from misguided presents; that shiny new toy your child begged you for, played with for ten minutes and then thrown under the bed never to be seen again. It is easy to see why some members of the family are starting to consider other gifts of a more financial nature. Some parents and grandparents are offering financial gifts by opening an account or investment, in the hope that their child will build a nest egg or even start a saving habit.
If you are thinking about a financial gift, there are a few options you could consider:
Junior ISAs – these have been around for a little over a year and have an annual subscription limit of £3600 tax-free (which, from April 2013, will rise in line with inflation). While they do not have a government contribution like their predecessor’s, Child Trust Funds, they are free from income tax and capital gains.
Children’s saving accounts – if you are looking for something a little more flexible it may be worth looking into children’s savings accounts. Be sure to ask your bank for a R85 form to sign, this will mean they receive gross interest without tax deduction. Some banks may offer a free gift when you open an account, but don’t be pulled in as many of these are trying to hide lower returns.
Premium bonds – a family favourite for many, premium bonds can be bought for under 16’s from National Savings and Investments, the minimum investment being £100. Instead of earning interest every month you could win monthly prize draws.
If you need advice on your family finances, an accountant could help. For more information, see our Personal Finance page.
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