Saving for your child’s future

The decision to begin saving for your child’s future can be one of the most important financial choices you will ever make. Whether it’s money for their education, helping to buy their first car or even as a financial cushion for when they enter adulthood, planning for your child’s future can provide them with the best possible start to their life as an adult.

Ready to give your child the best start? Review the options outlined below to find the perfect investment strategy to help your money mature and grow with your family. 

What savings accounts are available for children?

We understand that there is a lot of economic uncertainty right now, which means it’s more important than ever to make investment choices that suit you.

To help you decide, we’ve put together an easy list of savings accounts for your children, including how much you can invest, how long the investment will last and the benefits offered by each type of account, including:

• Investment Junior ISA (JISA)

• Children's Tax Exempt Savings Plan (TESP)

• Children's Regular Savings Plan

• Children's Investment Bond

Please Note: Tax treatment depends on individual circumstances and may be subject to change in the future.

Investment Junior ISA (JISA)

A Junior ISA (or JISA) is a tax-efficient, flexible way to save up to £9,000 a year towards your child’s future. A JISA benefits from tax-free status, meaning that there is no tax due on any gains, as well as giving you the option to make ‘top-up’ payments up to the annual maximum cap of £9,000.

Another benefit is that anyone can contribute to a JISA, making it the perfect option if your child has grandparents, godparents, or family friends who want to contribute financially to their future (with a minimum contribution of £25). 

The minimum investment amount is £10 a month or £100 as a single premium. When your child turns 18, they will have the option to withdraw the cash or roll it over into a standard Adult ISA.

Before making financial decisions, please read our Junior ISA Product Information Pack and Key Information Document. 

Please Note: A JISA is available to all children under 18 who have not received a Child Trust Fund (CTF). However, if your child already holds a CTF, this can be transferred into a JISA, which will not count toward your child’s annual JISA allowance. 

Children's Tax Exempt Savings Plan (TESP)

Our Children’s Tax Exempt Savings Plan is a savvy way to build a financial cushion for the children in your life without breaking the bank. With contributions starting from as little as £5 per month, this plan offers you a guaranteed minimum amount upon maturing, giving you the confidence to prepare for the next big milestone knowing that the money will be ready when they need it the most.

In addition, TESPs provide a separate annual allowance in addition to JISA contributions, so if you are looking to add to your child’s investments and have already maximised their JISA allowance for the year, a TESP is a great way to make additional savings.  

Are you trying to teach your child about finances? TESPs are designed for small, regular contributions, so you can help your child learn good financial habits while building up a nest egg. Choose a fixed term of anywhere from 10 to 25 years and prepare a cash lump sum for your child’s birthday or other milestones without paying any tax on your gains and benefitting from the chance to gain additional bonuses based on market performance.

Before making financial decisions, please read our Children’s TESP Product Information Pack and Key Information Document.

Children's Regular Savings Plan

A Children’s Regular Savings Plan is a great option if you have already maximised your Children's Tax Exempt Savings Plan (TESP) and JISA allowances.

Like a TESP, a Children’s Regular Savings Plan can be set for 10 to 25 years. However, as no tax exemption is involved, a Children’s Regular Savings Plan allows contributions of up to £1000 per month, allowing you to provide even more value for your children’s future.

Please note: The key difference between a Regular Savings Plan and a TESP is the tax-exempt status. However, taxes are paid on a Children’s Regular Savings Plan, and these are usually paid at a basic rate by the fund itself, meaning that in most cases, you won’t have to worry about paying taxes when it is time to collect your money.

Before making financial decisions, please read our Children’s Regular Savings Plan Product Information Pack and Key Information Document.

Children's Investment Bond

If you have a lump sum ready to invest for your child’s future, you might want to consider a Children’s Investment Bond.

An Investment Bond allows you to make a one-time payment ranging from £1,000 to £150,000 and offers a minimum guaranteed return plus the possibility of receiving bonuses.

This type of bond is also open-ended, meaning your child can leave their money invested and continue earning bonuses until they’re ready to use it.

After five years, you are guaranteed the option to receive the full value of your investment plus 5% and any bonuses accrued during the investment period (although bonuses are not guaranteed).

An Investment Bond is designed to last at least five years. You can surrender a bond if necessary, but this may lead to you receiving less money than you put in.

Before making financial decisions, please read our Children’s Investment Bond Product Information Pack and Key Information Document.

Child Trust Fund

A Child Trust Fund is a tax-free savings account introduced by the UK government for children born between 1st September 2002 and 2nd January 2011.

Each of these funds began with a voucher provided by the government for either £50 or £250, depending on when the child received their entitlement. This voucher allowed parents to choose a provider for their Child Trust Fund, either as a cash fund or as a stocks and shares account like those offered by Sheffield Mutual. 

Like the Junior ISA, anyone can contribute to a Child Trust Fund up to a maximum value of £9,000 a year.

In cases where a parent has failed to use their child’s voucher, the government has nominated a provider to ensure that children can still benefit from the investment. If you were born or had a child between 1st September 2002 and 2nd January 2011 and are unaware of any Child Trust Fund, browse the Government advice on Child Trust Funds.

You cannot open a new Child Trust Fund as these have been replaced by the JISA. However, if you are under 18, you can transfer this fund into a JISA without affecting your annual allowances.

Ready to Start Saving for Your Child’s Future? 

Planning the future can be an exciting time for your family. Apply online today or ask to receive a quote, and take the first steps towards securing your child’s financial future by choosing a savings account for your children. Do you still have questions? Review the key information document on any product or contact Sheffield Mutual with your queries.

This blog provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.