Give your children a head start this tax year

Here Cranwell Wealth Solutions, a Heathfield-based wealth advising firm provides their guide on how best to support children financially.

If you’re part of the ‘sandwich’ generation, with responsibility for a young family and elderly parents, you can feel pulled in every direction financially.

Making the most of tax reliefs and allowances now can really help take the pressure off.

With so many calls on your money, it makes sense to take advantage of the tax allowances, even the ones we’re most familiar with, such as the annual £20,000 ISA allowance.

Cash ISAs make a good, tax-efficient home for rainy-day funds, and Stocks & Shares ISAs can provide the potential for growth from your investments to help achieve your longer-term ambitions.

Tax-efficient savings could help your loved ones with long-term care costs, taking a weight off their mind, and yours.

Giving your children a tax break too

When it comes to giving your children a head start, opening a Junior ISA for them means they can build up a tax-efficient pot of money. They can access that at 18, or roll it over into a standard ISA, and continue to save. It could make all the difference to them getting their first mortgage.

You might also be thinking about helping them with university, student debt or getting on the property ladder. Today’s teenagers may face working and retirement lives that are very different from our own, so giving them a practical, financial head start can really help.

How pension tax relief can help

Pension tax relief can make a significant difference to the amount of money you can save for later life. Any parent or legal guardian can open a children’s pension from the moment they’re born. You can put up to £2,880 a year into their pension, and the 20% pension tax relief bumps this up to £3,600. The tax benefits on pensions mean that even quite small amounts paid in regularly every month can make a huge difference.

Making the most of Capital Gains Tax

People often forget about the annual Capital Gains Tax (CGT) allowance too, which can make a big difference to your investment growth. CGT is the tax that you pay on the profits if you sell a property or asset that has increased in value. The current 2022/23 Tax Year CGT allowance means that the first £12,300 of profit is tax-free. Next tax year, this allowance will drop to £6,000 and then down to £3,000 in 2024/25.

The amount of CGT you’ll pay depends on your tax band and the asset you’ve made a gain on, and it’s well worth taking financial advice on this, as it is a complex area of tax planning.

Taking financial advice will keep you ahead of the game

Most of the tax allowances and tax reliefs you can claim are on a use-it-or-lose-it basis, so planning ahead is important. With tax-year end coming up fast, checking in with us will help make sure you don’t miss out.

Cranwell Wealth Solutions are based locally in Heathfield, 56 High Street.

www.cranwellws.co.uk 01435 866101

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA or a deposit 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.

Cash ISAs are not available through St. James’s Place.

SJP Approved 30/01/2023