The Christmas presents that keep on giving

StockingsHow often have you watched your kids excitedly tear through a pile of presents on Christmas morning, only to see the contents cast aside by New Year's Eve?

No one wants to waste money on unwanted clutter, so why not spare your family the ordeal of feigning delight this year by opting for gifts that only get bigger and better as the festive season fades. Here are some ideas for you and the children this Christmas.

Set up a child's savings account

Cut down on the toys that inevitably get tossed aside after a few hours and suggest relatives set up a child's savings account in your child's name instead.

Many children's accounts only need £1 as a minimum deposit and then anyone from great aunts to godmothers can donate. As a parent you should consider how much money you place in your childs account as your gift should not produce more than £100 interest in any tax year, otherwise this will potentially be taxed as your income. You can also consider registering the account to make sure the interest received on the account is not taxed, simply fill in the R85 on behalf of your child

It might not come in a big shiny box, but with regular payments it could be enough for a deposit on their first car by the time they reach 18 (and are old enough to withdraw the money). And there aren't many presents better than that!


Start an education fund

Start building up funds now with a straightforward savings account. You can set up a regular standing order from your current account, so you know that your savings is always growing. You can even open up a children's savings account from Barclays, giving you a great way to save regularly on behalf of a child, all with instant access in case you need the money. 

Get a Junior ISA

Another way of creating a nest egg for their future is by opening a Junior ISA in their name. The Junior ISA's offer parents a tax-free way to save for children and is an easy way to set up a tax-efficient lump sum – up to £3,840 in the 2014/15 financial year, starting 6th April 2014..

 

Power up their mobile

No self-respecting teenager would be caught without a mobile phone these days, but all those texts can eat up credit sooner than you can type 'LOL'. And let's face it, there are far more interesting things for them to spend their own money on than topping up their phone.

So they are bound to be grateful for a set of vouchers that takes care of that for them. That way they can concentrate on organising their social life and you can rest easy knowing they've got enough credit to call you should they need a late-night lift home.


Give a money gift

If your parents don't know about this already, tell them about this now - grandparents or relatives can use their annual exemption to give gifts of up to £3,000 a year without it becoming subject to inheritance tax. In addition to this, they can make small gifts of up to £250 to as many individuals as they choose in a year.

Let relatives know that there are Inheritance Tax exemptions available, and they can decide if they want to take advantage.


Ask for an ISA

Once the kids are taken care of, don't forget about yourself. A cash ISA that offers instant-access is a truly great gift - you can stash away up to allowance in each tax year. The interest you earn is also tax-free* . Plus it can be opened with as little as £1, so it's a present even the most cash-strapped relative can afford!

Once it's set up, you can keep adding until you've reached the limit for the tax year (the new tax year starts on 6 April each year). If you choose an instant-access option, you can withdraw it whenever you like. Once you take the money out however, you can't pay it back in if you've reached your annual limit on deposits.

*Tax-free means that the interest earned on a cash ISA is free of UK income tax, subject to ISA conditions being met. Eligibility for ISAs and the value of tax relief within them depend on your circumstances. The rules around ISAs could change in the future. For all the latest information go to the HMRC website.


Open a bond

Related page

Stop money worries

If you're prepared to forego instant gift gratification for long-term rewards, then you could put a bond on your Christmas list. It means locking the money away for a set period but if you don't mind waiting, you'll be rewarded with a fixed rate of interest that is usually higher than an instant access account.

See how one mum got her kid's involved with saving for their own futures with help from their relatives in our video, How I saved for my kids' education.

For more information on saving options for you and your children, have a look at what kind of Savings accounts Barclays offers.


Sources:
BBC 2011. Sourced June 2011.

 
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Last updated: 03-Apr-2014 at 9:56 AM