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INVESTING TAX-EFFICIENTLY

Important information - Tax rules can change and benefits depend on individual circumstances. Investments 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. The information on this page is not personal advice. If you are unsure if an investment is right for you or your child, please seek advice.

Junior ISAs and child pensions

The main aim of investing for a child is usually to provide a nest egg to help them out financially in later life. However, there are additional benefits that could see the amount of tax needing to be paid both now and in future reduce significantly.

The simplest way to minimise tax is to use a tax-efficient account such as a Junior ISA or child’s pension such as the Junior SIPP. As the investments are held in the name of the child, no tax liability falls on parents either.

As with all things tax, the rules are likely to change over time. The benefits will depend on the individual circumstances of the child and the person paying into the child’s account.

Child tax rules and gifting

Investments outside a Junior ISA or SIPP are liable for tax. One solution is a legal arrangement called a bare trust which we offer through our Junior Investment Account

The investments are not held in the name of the child, but are taxed as if they belong to them - it is therefore necessary to consider the tax position of the child and also the person who is adding money to the account (the donor).

Why choose HL for your child's investments?

  • Security - we're a FTSE 100 company, trusted by over one million clients
  • Care - if you ever need a hand, we answer our calls in just 20 seconds*
  • Ease - check your child's investments anytime online or with the HL app
  • Expertise - investment ideas from our expert analysts

*Average Aug-Oct 2019

Junior ISAs

You can open an account online in minutes.

  • Free from UK income and capital gains tax
  • Does not need to be declared on tax returns
  • Start a Junior ISA from £100 or £25 per month

More on Junior ISAs

Junior SIPP

Fill out our application form to open a Junior SIPP.

  • Free from UK income and capital gains tax
  • 20% tax relief on contributions from the government
  • At age 55 (57 from 2028), the child can take a 25% tax free lump sum under current pension rules

More on Junior SIPPs

New to investing for children?

Have a look at our Guide to Investing for Children to find out how to start investing for a child's or grandchild's future.