Interested in any good savings schemes for children - do you know any? (not CTF)

[ChristianaTheSeventh]

I'm thinking to the future about when CTFs are abolished and wondering if I have another child what kind of investments can I do in shares that will grow to help with tuition fees etc?

And are there funds I can use currently that can top up my daughters savings, they have CTFs but we use the full £1200 limit per year.

Would love any advice of the good providers.

Many thanks

[Vermdum]

Honestly, savings accounts are the way to go.

CTF will mean absolutely nothing when the children now recieve them: all children get them, therefore the value of money will be lowerd by the total amount of money given out.

(A greater money supply means everyones money is worth less than before.)
In 20 years, people will be honestly shocked when they find interest rates suddenly drop, given that noone is taught how money works anymore.

[ChristianaTheSeventh]

I don't think that the money supply increase from CTFs is THAT much that it will affect the overall amount in circulation in any one year, seeing as they cost about £520m a year for the government and the total money supply is about £871 BILLION

I was wondering if anyone knew of any tax efficient ways to save from next year for children who won't get CTFs?

[LadyWellian]

Not quite getting Vermdum's reasoning there. From 2020 when CTFs start to pay out, they will be worth different amounts based on a) whether they were ever topped up and b) how the underlying investments have performed (or in the ase of cash-based, whether they have kept pace with inflation). I'm no economist, but I wouldn't have thought a cohort of 18-year-olds receiving sums that might vary from about £750 to £30,000 or so will distort the whole UK economy.

Christiana - it's hard to replicate the tax benefits of a CTF. You can do it by using an ISA, but that money will remain yours and you might be tempted to spend it.

The friendly societies are gearing up to say their 'baby bonds' are ideal but tbh about the only feature of CTFs they replicate is the low contributions, which are even smaller at £25/month IIRC.

You can get different tax benefits by using a bare trust. I think you can hold pretty much anything this way. The main thing it does is shetlers it from inheritance tax if you survive 7 years. It's legally the child's, like the CTF, which you might not be keen on.

Don't forget the £100 rule - money from a parent that generates interest/income of more than £100 a year is taxed as though it were the parent's, not the child's. So you might want to go for no-income investments like zero-dividend preference shares or funds investing in them. The capital gains tax allowances are more generous than for income tax and the £100 rule only applies to income.

Inevstment trust savings schemes - F&C and Witan both do ones specifically for children, and I think Alliance Trust might too - are usually lower cost than unit trust/OEIC ones.

However, I'm not qualified to give you advice, so you might want to talk to an IFA.