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Child Savings FAQs

Here are some of the more commonly asked questions about Child Savings.

Child Savings FAQs

Junior ISA

Who can have a Junior ISA?

A Junior ISA can be opened for any child under the age of 18 although if a child already has a Child Trust Fund it would have to be transferred to the Junior ISA once this has been opened. A Junior ISA can also be opened in your own name from 16 to 18.

What’s the minimum payment?

£50 (either as a one off or regular payment).

What’s the maximum payment?

£4,080 in the 2016/17 tax year.

Who can pay in?

A UK resident parent or guardian aged 16 or over must open a Junior ISA, but after that anyone can pay in.

Who do the investments belong to?

The child. They can control the investments from age 16 but can’t access them until they reach the age of 18. At that point the Junior ISA becomes an adult ISA in their name.

Who can take money out?

Normally you cannot access the funds until the child is 18 except in the case of death or terminal illness.

What are the tax advantages?

There is no tax to pay on income or investment growth inside a Junior ISA. (Apart from a tax of 10% on any dividend payments on UK shares. This is taken off before the dividend is paid and can’t be reclaimed.)

What are the charges?

£10 a quarter to hold a Junior ISA Account with us. You will also pay charges on the investments you hold and for any transactions you ask us to carry out. The charge changes to £7.50 a month once the child reaches 18. Read our Charges Guide for the details.

Is there anything else I should know?

From the age of 16 a child could open their own Junior ISA, provided they were resident in the UK. A child can only have one Junior ISA, but this can be transferred between different providers if you like.

Child SIPP

Who can have a Child SIPP?

Any child under the age of 18, as long as their parent or guardian has earnings that count for UK income tax or is resident in the UK at some point during the tax year.

What’s the minimum payment?

£50 (either as a one off or regular payment).

What’s the maximum payment?

£3,600 in the 2016/17 tax year. Including tax relief.

Who can pay in?

A parent or guardian aged 18 or over must open a Child SIPP, but after that anyone can pay in.

Who do the investments belong to?

The child. They will gain control of the investments when they reach the age of 18 but, based on current tax and pension rules, won’t be able to access them until they are aged at least 57.

What are the tax advantages?

Like a Junior ISA, there is no tax to pay on income or investment growth inside a Child SIPP.

Payments in also benefit from tax relief. Meaning that, to get to the £3,600 maximum payment in each year, only £2,880 has to be paid in directly. The rest (£720) is paid in as tax relief which we claim on your behalf.

What are the charges?

£80 a year (plus VAT) to hold a Child SIPP with us. You also pay charges on the investments you hold and for any transactions you ask us to carry out. When the child reaches 18 the charges go up to £216 a year (£180 plus VAT). Read our Charges Guide for the details.

Anything else I should know?

In theory, more than one pension can be opened for a child, but no more than £3,600 can be paid in across all of them in any one tax year.

First Steps IDA

Who can have one?

Any UK resident adult aged 18 or over can open a First Steps Account to invest for a child.

What’s the minimum payment?

£50 (either as a one off or regular payment).

What’s the maximum payment?

There’s no maximum.

Who can pay in?

Anyone can. You don’t have to be the parent or guardian of a child to open a First Steps Account either. Or any relation to them at all.

Who do the investments belong to?

The adult who opens the Account. You can think of our First Steps Account as a way to hold and track the investments you are making for a child separately from those you are making for yourself.

What are the tax advantages?

There are no tax advantages. And because the investments belong to the Account holder, if they die the First Steps Account will form part of their estate and the child won’t have any direct claim on them.

What are the charges?

£3.33 a month to hold a First Steps Account with us. You will also pay charges on the investments you hold and for any transactions you ask us to carry out. Read our Charges Guide for the details.

Anything else I should know?

There are no limits to how many First Steps Accounts can be open for the same child. And up to four adults can be joint holders on one Account.

When the child reaches 18 you don’t have to transfer the Account into their name. You are completely in control. But we change it into a regular Investment Dealing Account at that point, which means the Account fees will change to £7.50 a month.


Important information

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested. All investments carry an element of risk which may differ significantly.

If you are unsure as to the suitability of any particular investment or product, you should seek professional financial advice. We can’t give you financial advice.

Tax rules may change in the future and taxation will depend on your personal circumstances. Charges may be subject to change in the future.

Related documents

Visit our dedicated Child Savings literature page.
literature

Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.