There are many advantages to putting money away for a child while they’re still young. For one it gives money time to grow. It can also help to reduce the amount of inheritance tax (IHT) that might be paid in future.
Stock market investments are often seen as the best way to grow money over the long term, however there is the inherent risk that your child could get back less than is invested. A Junior Investment Account is simply a Fund and Share Account set up as a ‘bare trust’, where assets are held by a ‘trustee’ (e.g. parent or grandparent) for the future benefit of a ‘beneficiary’ (e.g. a child or grandchild).
Holding assets in trust for a child can have a number of tax benefits, both in the short and long term. In the short term it can help to reduce the amount of tax paid on investment returns, and in the long term it can reduce the value of an estate so less inheritance tax needs to be paid. See ‘What is a bare trust’ below for more information. Tax rules can change and benefits depend on individual circumstances.
Why choose Hargreaves Lansdown?
Opening a Junior Investment Account
To open a Junior Investment Account and set up a bare trust, download and complete the application and Election for Bare Trust forms. You should keep copies of the forms as evidence of your intention to set up a bare trust. When you apply you can choose to make a lump sum payment, and you can also set up a direct debit for regular monthly payments into the account.
Before opening an account for a child, see our Junior Investment Account charges.