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Breaking News March 14th 2018 Childcare scheme gets six-month reprieve

14 Mar 2018

Education Secretary Damian Hinds made the concession during a Commons debate yesterday March 13th.

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Your Childs Future in your pocket


In the midst of economic worries it is no surprise that families are making radical changes to their financial habits. Whilst we are all concerned with spending too much money, the recession has also seen families, financially unable to help out their children as much as they would like to. With further Government cuts and changes to higher education funding, parents may soon be faced with even less support altogether. Saving for the future of your children has never been more important!

Even if you can only afford to put a small sum away each month, a generous amount can still be built by the time your child reaches maturity. Starting to save now will mean the less money you will have to save each month, the more interest you will earn and eventually the bigger the difference you will make to their future.

The most important thing to recognise initially is how much you can afford to save month by month. You will then find it easier to identify which savings option is best suited for you and your child. A wide range of saving options are available on the market and it is advisable to devote some time in investigating them all.

Deciding on your savings target will be greatly dependent on your income and expenditures but even a small amount will build nicely over time. Don't forget Grandparents or other relatives who may want to contribute to the fund too. Regular payments from Grandparents are exempt from Inheritance Tax which will be a notable consideration to them when inheritance planning. Parents may also consider saving some or all of their monthly child benefit payments. Parents of a child under 16 or aged 16-19 if they are in relevant education or training are eligible for this payment.

There are a wide range of children's saving funds and accounts to choose from, offered by a range of providers including banks, building societies and friendly societies. The following are the general categories that these funds and accounts fall under but these are by no means exhaustive.

Saving Accounts

A high street savings account in your child's name is perhaps the easiest and most common way to save for your child's future. They also often have slightly better rates than standard accounts and it can be opened as soon as they are born. Until the child is old enough to have the account in their own name, a parent or guardian has to be the signatory.

The Child Trust Fund (CTF)

Children born between 1 September 2002 and 2 January 2011 are entitled to The Child Trust Fund (CTF), a long term savings account. If the child was eligible for child benefit, resident in the UK and born within the relevant dates, you would have received a voucher from the Government worth between £50-£250 to invest in a child Trust Fund account. There is a savings limit of £1,200 a year for all contributions, with no tax to pay on any interest or gains. Children are able to withdraw the money from the account when they reach 18.

Childcare Voucher Scheme

Although not a savings account, childcare vouchers are a special government scheme operated through employers and an additional way parents can maximise savings potential. Through it parents can save £1,000s per year in tax by paying for childcare by way of salary sacrifice. The vouchers cover childcare up to you child's 15th birthday and are usable by regulated, childcare providers such as nurseries, nannies, child-minders and au pairs. Ask your childcare provider about the voucher scheme.

Junior ISA

For children not eligible for a CTF, a Junior Individual Savings account for children (ISA) will come into effect as of autumn 2011. Contributions from parents, friends and relatives can be made up to the amount of £3,600 a year. Children will not be able to withdraw until they reach 18.

Investment Accounts

For parents of very young children, who have a number of years until university funding will be needed, investing money is a viable consideration. Funds are mostly invested in the stock market and managed by an expert to give more potential for growth. Unlike a deposit account however, the value of the Child Trust Fund may fall as well as rise but growth in the Trust Fund is free of income and capital gains tax. Anyone interested in investment for their child's future should seek professional financial advice as it is very important you understand the risks involved.

There is no better time than right now to be thinking about your child's future. We all want to give our kids the best possible start in life and by organising your budget and managing your finances now, you could be giving them a helping hand with the cost of living in the future.

Author: Eoin Olivers photo

Author: Eoin Oliver

Eoin Oliver is a web designer and blogger with six years of experience writing content and designing graphics for clients large and small. For the past three years Eoin has been focused on researching and writing about the childcare voucher scheme. When not hard at work, Eoin can be found in the company of his 4-legged companion Layla.

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