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Investing for children

Investing for children

Compare accounts and find out how to build a nest egg for a child

Important: please remember the value of tax savings depends on individual circumstances and tax rules can change over time. Investments can go down in value as well as up, so your child could get back less than invested. A Junior SIPP is a type of pension for people happy to make their own investment decisions, and is not accessible until age 55 which is likely to rise by the time your child reaches retirement. If transferring a pension please ensure you will not lose valuable guarantees or incur excessive exit penalties. If you are unsure if an investment is right for you or your child, please seek advice.

Junior ISA

  • Invest up to £4,080 in the 2016/17 tax year
  • No UK income or capital gains tax to pay
  • Transfer in existing Junior ISAs or Child Trust Funds

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Open a Junior ISA

Junior SIPP

  • Set money aside for a child's retirement
  • Get 20% tax relief - a £3,600 contribution only costs £2,880
  • Transfer in existing children’s pensions

Find out more

Open a Junior SIPP

Junior Investment Account

  • Create a valuable nest egg for a child’s future
  • No investment limits or access restrictions
  • Reduce future inheritance tax liability

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Open an account

Why invest for a child?

  • Provide a welcome financial boost when they need it
  • Help them with the future costs of education, buying a home, getting married or even retiring
  • Reduce the amount of inheritance tax that might need to be paid in future

Even small amounts tucked away regularly can build up a substantial nest egg, although inflation will reduce the spending power of that money over the long term. Assuming a growth rate of 5% a year, after charges, the table below shows how much a monthly investment could be worth in future. All investments can fall as well as rise, so your child could get back less than you invest.

Free guide to Investing for Children

Find out how you can start investing for a child's or grandchild's future.

Download your free guide

Time period £50 per month £100 per month £300 per month
5 years £3,404 £7,749 £17,333
10 years £6,809 £15,499 £34,666
18 years £20,427 £46,497 £103,999

Unsure which account is right for your child?

Whichever account you choose, you can be confident it will be easy to manage, there will be a wide investment choice and it will be great value for money. See how our three accounts for children compare. Tax rules can change and benefits depend on individual circumstances.

Junior Stocks & Shares ISA Junior SIPP Junior Investment Account
Eligibility Any child resident in the UK – if they have a Child Trust Fund this will need to be transferred to open the account Any child resident in the UK Any child resident in the UK
Investment limits £4,080 a year (2016/2017) £3,600 gross a year (£2,880 net) (2016/17) Unlimited
Withdrawals At age 18 (except in the case of terminal illness or death) At retirement - usually from age 55 (rising to 57 from 2028 but likely to rise further) At any time, although the money must only be used for the benefit of the child
Account holder The account belongs to the child but a parent or legal guardian must act as registered contact up to age 18 The account belongs to the child but a parent or legal guardian must act as registered contact up to age 18 The account belongs to a ‘trustee’, usually a parent or grandparent. At age 18 the child becomes entitled to any assets in the account
Tax benefits
  • Tax-free growth
  • No UK tax on income
  • Tax-free growth
  • No UK tax on income
  • 20% tax relief on contributions
  • Tax-free lump sum (usually up to 25%) plus taxable income at retirement
  • Can help with inheritance tax planning
  • Tax liability usually falls within the child's allowances (normally excluding parental gifts)
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Open a Junior ISA Open a Junior SIPP Open an account