Investment funds
Your child cannot hold a unit trust or investment trust (see INVESTMENTS) until they reach the age of 18, but an adult can open one and add the child’s initials to the account holder name. To make a legally binding investment for a child there may need to be a proper trust document drawn up.
Most unit trusts allow units to be designated for children which means the income will be treated as the child’s and the assets transferred to the child at 18. Some unit trusts companies allow units to be registered for children aged 14 and above
A handful of funds are aimed specifically at children and offer free gifts on opening. Investors should not pay much attention to these freebies as investment performance is far more important. A particularly successful fund could lead to capital gains tax issues as a child’s CGT allowance is the same as an adult’s at £7,200.
