1. Lifestyle guide:
how to build a £1 million
pension fund for your
children/grandchildren
- with help from the
taxman!
www.capital.co.uk

2. Lifestyle guide:
how to build a £1 million
pension fund for your
children/grandchildren
- with help from the
taxman!
Children can earn up to £9,440 a year without paying
tax, and can also enjoy some very useful tax breaks
to help them build their savings for life as an adult.
www.capital.co.uk

3. www.capital.co.uk
Children can earn up to £9,440 a year
without paying tax, and can also enjoy
some very useful tax breaks to help them
build their savings for life as an adult.

4. www.capital.co.uk
It’s never too soon
to start a pension
Savvy parents and grandparents
can put aside up to £3,600 a year
for each child under the age of 18,
and with tax relief and investment
returns factored in, this could be
worth over £1m by the time they
reach their own retirement age.

5. www.capital.co.uk
It’s never too soon
to start a pension
The beauty of starting a pension
for your children means that they
will have more financial freedom
when they reach adulthood,
allowing them to concentrate on
housing and education costs.

6. www.capital.co.uk
It’s never too soon
to start a pension
According to HMRC, at least 60,000
parents, grandparents and even
godparents have set up a pension
on behalf of a child.

7. Benefits:
Starting a pension so early gives your
child’s pension pot more time to
grow and is a great way to help ease
concern for your child’s financial
future. You can invest as little as £20
a month but if you put in your child’s
maximum allowance of £2,880, the
Government will add £720 in tax
relief, and if paid each year until age
18, expect to see their fund grow
to over £1m by the time they may
retire.
www.capital.co.uk

8. www.capital.co.uk
How does this
work?
Tax relief of £720 a year on top
of the £2,880 plus estimated
returns of 6 per cent after charges
certainly does add up.
Here’s the maths.

9. Tax relief of £720 a year
on top of the £2,880 plus
estimated returns of 6 per
cent after charges certainly
does add up.
The investments then
grow free from income
and capital gains tax.
Over the first 18 years
your contributions total
£51,840, with £12,960 in
tax relief added on top.
Aft
acc
of 6
pe
wor
the
is 6
mor
www.capital.co.uk

10. x relief of £720 a year
top of the £2,880 plus
mated returns of 6 per
after charges certainly
does add up.
The investments then
grow free from income
and capital gains tax.
Over the first 18 years
your contributions total
£51,840, with £12,960 in
tax relief added on top.
After taking
account a re
of 6 per cent
pension cou
worth over £
the time you
is 65 - witho
more contrib
www.capital.co.uk

11. t
he
ur
The investments then
grow free from income
and capital gains tax.
Over the first 18 years
your contributions total
£51,840, with £12,960 in
tax relief added on top.
After taking into
account a return
of 6 per cent, ..the
pension could be
worth over £1m by
the time your child
is 65 - without any
more contributions.
www.capital.co.uk

12. More good news; the £2,880
yearly contribution falls
below the £3,000 annual
gift limit for inheritance
tax (IHT). This removes the
money from your estate for
tax purposes even if you die
before the normal seven-year
threshold, potentially saving
your heirs 40 per cent in tax
Check out how much
your child’s pension will
be worth with Legal and
General’s children’s pension
calculator.
www.capital.co.uk

13. More good news; the £2,880
yearly contribution falls
below the £3,000 annual
gift limit for inheritance
tax (IHT). This removes the
money from your estate for
tax purposes even if you die
before the normal seven-year
threshold, potentially saving
your heirs 40 per cent in tax
Check out how much
your child’s pension will
be worth with Legal and
General’s children’s pension
calculator.
www.capital.co.uk

14. Other ways to save
Parents and grandparents can save up to £3,720
a year for each child under the age of 18.
www.capital.co.uk

15. Available to:
Any child under 18 (provided they don’t have
a Child Trust Fund).
Other ways to save
Parents and grandparents can save up to £3,720
a year for each child under the age of 18.
www.capital.co.uk

16. Available to:
Any child under 18 (provided they don’t have
a Child Trust Fund).
Limits:
£3,720 per tax year - which can go into a
Cash ISA, a Shares ISA, or a combination
of both. From 6 April 2013, you can save
up to £3,720 per tax year. Money can’t be
withdrawn until your child is 18.
Other ways to save
Parents and grandparents can save up to £3,720
a year for each child under the age of 18.
www.capital.co.uk

17. Regular savings account
In return for saving money into the account every
month, your child will get a better rate of interest
- but the money will have to stay in the account
for a while to benefit.
www.capital.co.uk

18. Regular savings account
In return for saving money into the account every
month, your child will get a better rate of interest
- but the money will have to stay in the account
for a while to benefit.
Limits:
You are normally restricted to investing a
maximum monthly amount of between
£100 and £250.
www.capital.co.uk

19. NSI Children’s Bonds
These are tax-free and you get a guaranteed rate
of interest
www.capital.co.uk

20. NSI Children’s Bonds
These are tax-free and you get a guaranteed rate
of interest
Limits:
You can save £3,000 per child, for every bond
‘issue’that goes on sale, but you need to keep
cash in them for a while.
www.capital.co.uk

21. Takeaways
It’s never too early to think about securing your children or
grandchildren’s future:
http://www.hmrc.gov.uk/taxon/savings.htm
www.capital.co.uk

22. Takeaways
It’s never too early to think about securing your children or
grandchildren’s future:
Make use of your child’s annual tax efficient pension contribution
allowance.
http://www.hmrc.gov.uk/taxon/savings.htm
www.capital.co.uk

23. Takeaways
It’s never too early to think about securing your children or
grandchildren’s future:
Make use of your child’s annual tax efficient pension contribution
allowance.
Children can earn up to £9,440 a year without paying tax.
http://www.hmrc.gov.uk/taxon/savings.htm
www.capital.co.uk

24. Takeaways
It’s never too early to think about securing your children or
grandchildren’s future:
Make use of your child’s annual tax efficient pension contribution
allowance.
Children can earn up to £9,440 a year without paying tax.
A Junior ISA, a regular savings account or NSI children’s bonds are
all great ways to save for your child.
http://www.hmrc.gov.uk/taxon/savings.htm
www.capital.co.uk

25. Takeaways
It’s never too early to think about securing your children or
grandchildren’s future:
Make use of your child’s annual tax efficient pension contribution
allowance.
Children can earn up to £9,440 a year without paying tax.
A Junior ISA, a regular savings account or NSI children’s bonds are
all great ways to save for your child.
Or you could even set up a stakeholder pension for your child’s
retirement.
http://www.hmrc.gov.uk/taxon/savings.htm
www.capital.co.uk

26. Download our eGuide:
Planning to sell your
business? Ten essential
steps you should take
in advance
Download Now!
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© Capital Asset Management 2013
www.capital.co.uk