Talking Point  

Clients making more use of Junior Isas


Cazenove Capital’s Laurence Forrester said he has seen a growing number of clients making Junior Isa subscriptions as they sought to invest for their children and grandchildren.

Speaking to FTAdviser ahead of the tax year end, Mr Forrester, a portfolio director, described Isas as "one of the most integral parts of tax-efficient planning for client portfolios", and said Jisas were "very good for medium to long-term tax efficient investing for the younger generation".

He pointed out the Jisa allowance was £4,260 in the 2018 to 2019 tax year, rising to £4,368 in the next tax year. 

But he also flagged the use of other allowances, such as pension contributions, as a way for advisers’ clients to set aside money for younger family members.

He said: "Other allowances that people should consider are pension contributions – not only to their own pensions but also now, in a not dissimilar fashion to Jisas, we’re seeing clients investing for their children and grandchildren because, of course, you get tax relief. 

"So even a one-year-old can make a pension contribution of £2,880, it gets grossed up to £3,600, so really, it’s free money from the government."

He added: "That’s a very useful, very long-term investment vehicle to use for children and grandchildren as well."

The tax year runs from April 6 to April 5, which may mean advisers are currently receiving a high volume of queries about tax allowances in the run-up to the end of the tax year.

Mr Forrester said he hoped not all clients would leave everything until the last moment.

He said: "Although they can still subscribe to Isas and make use of their allowances up until the end of the tax year on April 5...what we would advise though is that actually clients make use of those allowances throughout the course of the tax year."

Mr Forrester added: "Clients should also make use of their capital gains allowance, which is as it currently stands £11,700 this year going up to £12,000 next year. 

"Actually, throughout the course of the year, when you’re taking gains from client portfolios, it actually goes hand in glove with the Isa subscription. 

"Because what you can actually do is take some gains in portfolios, park the cash there temporarily and then very early in the next tax year you can make the Isa subscription with that cash, and get it invested and working for you."