| Stocking
fillers
Stakeholder pension
A
contribution to a stakeholder pension qualifies for basic
rate tax relief. You can currently take out a stakeholder
pension in a child's name from birth and contribute up to
£2,808 net each tax year into the plan. The Inland Revenue
will add basic rate tax, which will bring the total invested
annually up to a maximum of £3,600.
Cash
Mini ISA
Up
to £3,000 a year (reducing to £1,000 a year from tax year
2006/07) can be sheltered in this tax-efficient savings
account, which is also available to children aged 16 and 17.
National
Savings
These are regarded as low-risk investments and
opening an account is a simple procedure. The downside to
this type of investment is that, if interest rates remain
low over the medium to long term, the rate of interest paid
on some investments may be less than the rate of inflation.
Unit
trusts
A
unit trust is a collective investment fund and should be
considered as a medium- to long-term investment of five
years and beyond. Unit
trusts vary in risk profile from relatively cautious to
highly speculative. Over the medium to long term, on average
they have provided a better return than money held on
deposit, although past performance is not necessarily
a guide to the future.
Friendly
Societies
Another
investment choice is a Friendly Society ten-year tax-exempt
regular savings
plan. After ten years, returns are tax efficient. The
savings plans also provide life insurance cover. The maximum
monthly premium for each individual is £25 or £270 per
annum.
Levels
and bases of, and reliefs from, taxation are subject to
change. Because these investments may go down in value as
well as up, you may not get back the full amount invested.
The amount that can be contributed into pension schemes is
subject to set limits.
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