The Lemon Fool

Opening a Junior SIPP for our 10 year old son. Mainly because of the tax relief he'll get instantly - if we put £2880 in he gets £3600 so it's a 20% return on the day of the investment. Then leave that there for 50 years and it will be worth a nice little sum when he retires.

He is our only heir, and he'll inherit from us before he's 60 (we are 50 and unlikely to live to 100!) so he won't need the money then.
He does have a S&S ISA currently worth around £10k which he can access at 18, or hopefully later when he's ready to buy a house and needs a deposit.

Or is it just not worth it, because we can continue to invest in his ISA, and he can choose to move a portion of that to a SIPP and get 20% tax back then?

Jopo

I guess it depends how much you are going to leave/give him over the years.

If you want to help towards a house deposit then a LISA will eventually make sense, if his JISA is being filled then a JSIPP makes sense, if he'll inherit a million quid at 55 years old then a few 3k in a SIPP won't be a massive difference.

Later in life you might want to do Grandchild JISAs rather than to son.

There are so many variables, including future tax rules, that personally I'd hedge my bets and have a broad spread of products.

Paul

We've gone with JISAs for our kids. I'm not keen on the JSIPP.

There's no real logic, but money at 18 carries much more weight than money at 57.

The options and choices available at 18 are fundamental to the life of an individual. Honestly, can anyone say that they'd prefer to have a windfall at 57?

Jopo1 wrote:Opening a Junior SIPP for our 10 year old son. Mainly because of the tax relief he'll get instantly - if we put £2880 in he gets £3600 so it's a 20% return on the day of the investment. Then leave that there for 50 years and it will be worth a nice little sum when he retires.

There's a good chance that when the money is drawn down from the SIPP after retirement it will be taxed, negating the tax relief received now. (This is the case no matter how much the investment has grown in the meantime.)

Currently SIPPs benefit from tax free lump sums, and protection from inheritance tax. It'd be a brave person who'd bank on those benefits being unchanged in 50 years time.

Scott.

If you are SE based professionals (late kids, 'he will inherit' are my clues) the sausage machine means he probably will be as well.
So plenty of opportunity to load up a SIPP at 40% later.

W.

I have been maxing out Junior ISAs and Junior SIPPs for our children (which I understand is a very fortunate position to be in).

The plan is to have around £200k in each Junior ISA by 18 as a university / first business / first home fund and then have about £100k in each SIPP which will have years of compounding to do.

One disadvantage if the Junior ISA is that the money is theirs at 18 so may go on drugs and fast cars. But I plan to address that by a) raising them right and b) intercepting all the post!

Also consider bare trusts for your children.

Money settled (ie paid in) by the parent that produces income >£100 pa is taxed as if it was the parent's income. But if a grandparent/sibling/friend was settlor then it's taxed as the child's income.
Consider larger sums invested into very low yielding products, and harvest the CG annually, since the child has its own allowance regardless of whether the parent was settlor.

If you are SE based professionals

Opposite end of the country, but otherwise yes

One disadvantage if the Junior ISA is that the money is theirs at 18 so may go on drugs and fast cars. But I plan to address that by a) raising them right and b) intercepting all the post!

That's our plan for the JISA too! Especially the interception of post....

JOpo