Year End Tax Planning 2021/22

As a new tax year approaches, it is important to ensure you are in the best financial position to help protect and grow your future wealth.

Our Bitesize Tax Planning provides you with details of the key allowances and reliefs available to you. The tax planning tips are available in easy to consider sections.

This article looks at Junior Individual Savings Accounts (JISA).

Opening a JISA
There are 2 types of JISA’s:
  • A cash JISA – you will not pay tax on interest on the cash you save
  • A stocks and shares JISA – your cash is invested, and you will not pay tax on any capital growth or dividends/interest you receive
The fund builds up free of tax on investment income and capital gains until your child reaches age 18. At this point the funds can either be withdrawn or rolled over into an adult ISA.

The account must be opened by the child’s parent or guardian. However, relatives and friends can also contribute to your child’s Junior ISA, as long as the £9,000 limit for 2021/22 is not breached. Some of the best cash JISAs pay a rate up to 2.4% [1]. So it is worth encouraging grandparents and other family members to contribute to your child’s JISA. In doing so, the grandparent is moving money out of their estate for IHT purposes, which could be exempt if certain conditions are met.

Savings in a JISA account cannot be withdrawn until the child reaches 18. Any child owning a Child Trust Fund (CTF) can’t hold a JISA. If you want to open a Junior ISA ask the provider to transfer the CTF into it.

For more information or to discuss any of the issues raised in this article, please contact your adviser, or call us directly on 0161 819 1131. Further information can also be found at https://www.gov.uk/junior-individual-savings-accounts

[1] https://www.moneysavingexpert.com/savings/junior-isa/

See the other topics in our Bitesize Tax Planning series:

Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.

The financial conduct authority does not regulate tax advice, estate planning or will writing.

The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

Pareto Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.