The Rising Cost of Raising a ChildWritten on July 8, 2015 by Kirk Rice LLP
The cost of raising a child from birth to age 21 rose by almost £2,000 in 2014, so little wonder then that parents and grandparents are thinking ahead and looking for ways to provide cash to help meet these expenses when the time comes.
Research carried out by the Centre for Economics and Business Research shows that the increase in cost was largely driven by the continuing rise in childcare fees. The cost of education stood at around £75,000, up by 128% since 2003.
Meeting the cost
If you have sufficient time in hand, you can save tax-efficiently in a Junior Individual Savings Account (JISA). Designed to help parents save for their children’s future tax free, the allowance is £4,080 in 2015-16. Withdrawals can’t be made from a JISA, so they should be regarded as a long-term investment. Children can gain control of the fund at age 16 and have access at 18, when the account turns into an adult ISA. You can save through your own IS A and pass the funds onto your child. This route also lets you save more per year than under the JIS A rules; the allowance for 2015-16 is a generous £15,240.
Alternatively, you could invest a lump sum in shares, bonds or funds. There are many options currently available in the market, so you should consult your adviser for guidance. Writing these investments in trust for the child means that tax on any gains is payable by the child and not the parent. If the gain falls within their personal allowance, it would be tax free.
So, if you’re planning to provide for a child’s future, it pays to get good advice and start making plans as early as possible.
The value of investments can fall as well as rise. You may not get back what you invest.
It pays to talk to us, we can assess you and your family’s needs and make sure you have everything in place for your future financial needs. If you would like to discuss your own situation please call Peter Sharratt on 01344 875000 or email peter.sharratt@kirkrice.co.uk
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