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1. The demise of the child trust fund set up by Labour in
2005 and the prospect of the Conservative-Liberal
Democrat coalition's new Junior ISA in the autumn of 2011
means that for many they will be re-assessing whether
and how they will be saving for their child's future. As the
cost of living seems set to continue its upward path, it is
therefore worth taking a look at the benefits that still exist
for putting money aside for children.

2. There are significant tax breaks to be gained when saving
on behalf of your children, although as with all such
schemes there are some limits and restrictions to be
aware of.

3. Savings accounts for children are exempt from any tax on
the interest that accumulates on deposits as long as the
child in question does not have a total income exceeding
£6,475 for the current tax year (as with adults). However,
if the money which is donated by an individual parent or
step parent earns more than £100 interest in a tax year
then the interest will be taxed as normal. This limit applies
per parent though, so in a family with both parents
present, the combined possible limit is £200 and there is
even the potential for the limit to be as high as £400 if two
step parents are involved. What's more, the limit does not
apply to grandparents and other adults that wish to
contribute to a child's savings plan. Therefore, these
restrictions should not prevent parents and guardians
from accumulating a healthy nest egg for their children

4. In addition, it is worth bearing in mind that any money
placed into a child's savings account will avoid being taxed
inheritance tax providing the donor does not die within
seven years of making the donation.

5. Whilst the Child Trust Fund (CTF) is being phased out by
the coalition government, it is still a valid savings solution
for many parents and their children. All children born
between September 1st 2002 and January 2nd 2011 were
eligible to start a child trust fund if they were paid any
child benefit before January 3rd 2011. For those who have
already opened an account, payments can still be made
into it until the child turns 18. The trust benefits from a
starting contribution from the government of at least £250
(except children who first received child benefits after
August 2nd 2010 who will receive £50 only) with the
possibility of further contributions for children in low
income families. All income and gains from the CTF will be
tax free although the contributions made by parents (or
any other donors) must not exceed £1,200 in the tax year.

6. The coalitions government's replacement to the CTF is the
Junior ISA which is due to launch in the Autumn. The
Junior ISA will not receive the government contributions
that the CTFs benefited from however it will allow parents
to save on behalf of their children and take advantage of
the tax exemptions and investment choices that adults can
currently benefit from with conventional Cash ISAs and
Stocks and Shares ISAs.

7. There are a few other savings solutions for children which
should be mentioned including the National Savings and
Investments' (NS&I) Child Bonus Bonds and Index-
Linked Savings Certificates. These plans also benefit from
tax exemptions but differ in the terms for which they run
and how the income is generated.

8. Having outlined the available options for Child Savings and
their advantages, time should also be spent considering
why it is beneficial to save for your child's future.

9. The recent fracas that has surrounded the coalition
government's revamp of the tuition fee structure has
brought the issue sharply into focus for many parents who
must now be wondering how they will give their children
the best possible foundation to make the most out of their
higher education and deal with the financial consequences
when they come out of the other side. One thing that
seems certain is that tuition fees are here to stay in some
shape or form as all three major political parties in
England at least have backed an incarnation of the fees.

10. For many of course, University may not be may not be the
primary consideration. It could also be argued that, even if
it is, should the policies surrounding tuition fees remain as
they are today, the nest egg you save for your child would
in fact be best used to lay the foundation for their post
university lives. Therefore attention turns to equipping
your children for their professional adult lives.

11. The current climate means that it is harder than ever for
first time buyers to get onto the property market. The
days of easily obtained 100% mortgages have gone and
financial institutions (and the public) may be wary of them
being re-introduced due to the troubles of the credit
crunch and subsequent recession. The focus has really
come back onto having a substantial deposit. Whilst prices
have come back down to some extent they have not fallen
drastically and will no doubt creep back up the stronger
the economy gets. Arguably the difficulty for first time
buyers to get onto the market only seems likely to
increase. Meanwhile, with oil prices rising, and
consequently the cost travel, food etc, there are plenty of
reasons to give your children the best head start possible
when the time comes.

12. Having painted a slightly gloomy picture of the prospects
for our future generations you may wonder whether you
can accumulate an amount which will really make a
difference, especially at a time when budgets are already
being squeezed by the cost of living. It is worth
emphasising therefore that a little amount can go a long
way. The earlier you start Saving for Children the greater
the potential for growth that those savings have. What's
more, any amount will start your child's adult life on a
positive footing rather than encouraging them to begin in
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