Investing for Children

updated: January 22, 2010

Most parents would probably agree with the idea of building up a nest egg for each of their children, and no doubt wished their own parents had done so for them.  However, it is surprising how few actually invest for their children in any methodical way.

Consider the difficulty that most children will find in purchasing their first house when the 10% deposit is probably going to be equivalent to their total take home pay for two years in their first proper job; or consider the total cost of getting through university or college.

How many young people would love to start their own business if only they could find the ‘stake’ money to do so?

Where you invest money in the name of your child, the resulting income may be taxed as if belonging to you.  This treatment applies where:

(1) your child is a minor, and

(2) your child is unmarried, and

(3) the income exceeds £100 per tax year for each child.

This means that whilst it is fine for other family members to give money to your children, you have to be more careful with the money that you put aside for them.  A way which remains open for achieving a tax saving is for you to give capital to your child, with the money being invested in a roll-up fund or some other investment which does not produce taxable income. 

To obtain further information please click here for our pdf Guide to Investing for Children.