Jisa or children’s savings account?
Jisas are an attractive way to build up savings for children in the long term – parents or guardians can open the account for under 16s and then anyone can top up the account up to the maximum annual allowance.
However, there are a number of children’s regular savings accounts that pay more and may be better suited to those who have smaller sums to save or who want to maximise funds in the short term.
For example, Saffron Building Society and Halifax have a regular saver for children which offer a rate of 4pc. Up to £100 a month can be deposited in the account for a year. Around £26 would be earned in a year.
Santander’s mini 123 current account pays 3pc on balances between £200 and £2,000.
Despite the higher rates, parents may still find Jisas more appealing.
One benefit of the accounts is that the cash cannot be touched until the child turns 18 – then it is theirs to do with as they please.
Any interest earned is also tax-free.
Generally speaking, if more than £100 a year is earned from money saved by a parent for a child in a standard account, than tax applies at the parent’s rate – if it pushes them over their personal savings allowance.