How can I invest for my children?

By Paula Hurford, Wealth Management Consultant

How much does it cost to raise a child?

In 2022, raising a child from birth to the age of 18 cost a two-parent household

£157,562 and a single parent

£208,735.1

With a child’s everyday costs on the rise, it can be hard to look at the long-term costs that may come as they approach adulthood, such as a car, university fees, or a house deposit. But successful saving for your child’s future doesn’t have to break the bank and could really make a huge difference to them.

The secret? Start saving early! The longer the investment has to grow, the greater the potential benefit for your children will be. In addition, introducing your child to the concept of long-term investing at an early age can help build smart money habits for them to take into the future.

How can I give my child a great start in life?

Junior ISA (JISA): A tax-friendly option that anyone can pay into (parents, grandparents, godparents, etc.) and is set up by the parent or legal guardian.

There are two types; a Cash JISA and a Stocks and Shares JISA. You can pay up to £9,000 across both types in the current tax year and the money is held within the JISA until the child reaches 18 when it can be converted into an adult ISA with the same tax advantages.

Pension: Although it may be a long time before they can access it, children can have a pension as soon as they are born and setting one up can have significant tax advantages due to the government’s tax relief. Even a small contribution could grow into a substantial pot over time.

You can invest a maximum of £3,600 gross annually and, just like JISAs, a parent or legal guardian can set one up and anyone can pay into it. This may even help mitigate Inheritance Tax (IHT) liability for the contributor in certain circumstances.

If you’d like to know more about the smartest ways to save for your children’s financial future, please do not hesitate to get in touch.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested

An investment placed into funds (equities) would not have the security of capital associated with a deposit account with a bank or building society.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Please note that St. James’s Place does not offer Cash ISAs.

1Child Poverty Action Group, 2022

01978 311611 paula.hurford@sjpp.co.uk www.hadlowedwards.co.uk

SJP approved on 09/05/2023

Do you need to file a tax return for 2022/23?

Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a Self-Assessment return needs to be filed.

The list of taxpayers that are usually required to submit a Self-Assessment Tax Return include:

The self-employed (earning more than £1,000);

Taxpayers who made profits from selling assets such as shares, a second home or other chargeable assets and need to pay Capital Gains Tax (please note there is now a requirement to file a 60-day Capital Gains Tax Return on property sold that is not your current residence); Company directors – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, for example a company car;

The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a SelfAssessment return needs to be filed.

Taxpayers whose income (or that of their partner’s) was over £50,000 and one of you claimed Child Benefit;

Taxpayers who had income from abroad that they needed to pay tax on;

Taxpayers who lived abroad and received a UK income; or

Taxpayers who have income over £100,000 including those employed.

HMRC must receive your tax return and any money you owe by the following deadlines:

• Paper tax returns are due by midnight 31 October 2023

• Online tax returns are due by midnight 31 January 2024.

• Payment of the tax you owe by midnight 31 January 2024.

• Second payment on account by 31 July 2024 (if your liability is over £1,000)

If you need to file a tax return and you miss the deadline for submission or don’t pay your tax liability on time you will get a penalty.

The late filing penalty is £100 if your tax return is up to 3 months late, but you will have to pay more if it’s later. You’ll also be charged interest on late payments.

If you are unsure on any of the above or need help completing and submitting your self-assessment tax return, please contact us for a free consultation.