Parents and guardians can open Junior ISA accounts for their children and invest on their behalf to make the most of their annual allowance.
The ISA limit for children is much lower than the adult limits of £15,240 for this tax year and £20,000 for the next tax year.
Danny Cox, a chartered financial planner at Hargreaves Lansdown, said: “You can open a Junior ISA for your children and invest up to £4,080 in this tax year and £4,128 in the next tax year.
“Once opened anyone can pay into a Junior ISA as long as the overall limit is not exceeded. Junior ISA are very popular ways for grandparents to save for their children.”
In a similar way to adult ISAs, you can invest in cash or stocks and shares or a combination of the two.
But your children will not be able to access the money that you invest for them until they reach the age of 18.
From the age of 18 onwards, young adults can withdraw the money from their Junior ISAs and can spend it how they wish.
Once young people reach the age of 18, they can open a lifetime ISA to save towards their first home or retirement.
Alternatively, they could choose a Help to Buy ISA, standard adult ISA or even a new Innovative Finance ISA which includes peer-to-peer loans.
Savers cannot carry the current tax year’s Junior ISA annual allowance over to the next tax year, which begins on April 6 2017.
This means that if you do not take action before the last day of the tax year - April 5 - then your child’s allowance will be gone for good.
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