The tax-savvy way to help give the next generation a head start

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If you have young children and elderly parents to consider, there can be a lot of competing demands on your finances. It is key to think not only about your own retirement but also about building a foundation for your children’s future.

Every little bit helps

With so many competing priorities, you need all the help you can get, so it makes sense to take advantage of the tax allowance and relief opportunities that are available.

ISAs can be the foundation here, with Cash ISAs providing rainy-day funds and Stocks & Shares ISAs to provide the potential for growth from your investments to help meet your various objectives, from buying a new home to building a retirement fund.

When it comes to younger family members, Junior ISAs are a good, tax-friendly way of building up a pot of money that children can access when they turn 18. While only parents or legal guardians can open a Junior ISA, anyone can contribute – be they grandparents, godparents, or family friends. Junior ISAs are a great way to save to help children with future fees relating to University and student debt or by building a property deposit.

Outside the box

Pensions are similarly invaluable from a tax perspective, given the difference that pension tax relief can make to your investment growth over time. If you would like to give your children a head start on retirement saving, a junior pension is an attractive option.

While this may not feel like a priority, the tax benefits on pensions mean that even very modest amounts paid in from a young age can benefit your children later in life. Other allowances are sometimes overlooked but can also make a material difference.

The annual Capital Gains Tax (CGT) allowance, for instance, means you can sell a property or investment that has increased in value without paying tax on all the profits you receive. The allowance is currently £12,300, and there are different levels of CGT, depending on your tax band and the asset you’ve made a gain on. As your assets build up over time, understanding how to get the best from the CGT allowance can become increasingly useful.

Don’t sit on the sidelines

Most of the allowances and reliefs you can benefit from work on a use-it-or-lose-it basis, so planning is vital, and taking advice well before the tax year ends is a way of making sure you don’t miss out. It can be confusing knowing when and how to give money to your children alongside securing your own financial future.

Speaking to a financial adviser can help you to build a tailor-made plan to discuss your objectives and to ensure you and your family have the financial security you need today and in the future.

Don’t let your tax allowances go to waste!

Please don’t hesitate to contact us at Rhodes Brook Financial if you wish to have a no-obligation chat regarding how you can make the most of your financial situation before the tax year-end.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA or a deposit with a bank or building society. The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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