Tax-free investments for your child
Invest between £10 and £25 a month, tax-free for your child’s future.
The Scottish Friendly Child Bond lets you put away a small amount each month for a special child in your life and could provide them with a tax-free lump sum to help them take their first footsteps into adult life.
It's a tax-free with-profits plan, which runs for a minimum of 10 years, which you can take out for any child under 16.
The table below provides the plan detail and things you should consider. For more information on the Child Bond please visit the detail tab.
|Your Child Bond||What you need to consider|
|i Tax information|
No advice has been provided by Scottish Friendly in relation to this plan. If you are in any doubt as to whether this plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
Did you know you’re allowed to invest up to £25 per month tax-free for any child, resident in the UK, with a friendly society such as Scottish Friendly?
As long as you haven't used up the child's allowance either with us, or another friendly society, you can take out a Child Bond for anyone who’s under 16.
A Child Bond is a tax-free with-profits plan, which runs for a minimum of 10 years however you can set up a Child Bond for longer, until the child’s 18th or 21st birthday. For example, if your child is 3 on their next birthday, for the bond to mature when they turn 18 you would need a 15 year term.
You don’t pay tax on the growth of the investment (other than tax on dividends from UK shares). And there’s no tax to pay when Child Bond pays out after your chosen term. Please note, that tax treatment depends on individual circumstances and tax law may change in future.
The Child Bond is the property of the child and you can be sure they’ll appreciate the extra money when they’re older.
You can put away £10 to £25 per month or £120 to £270 per year in the Child Bond.
Please remember, if you stop the Child Bond within the first 2 years, the child will get nothing back. After the first 2 years, the payout may be lower than what you’ve paid in.
The premiums you pay into a Child Bond are invested in the Scottish Friendly With-Profits Fund. It is carefully managed across a range of assets, aiming for long-term growth and a degree of security in the form of a guaranteed minimum cash sum after 10 years. Please go to 'How we invest your money' to see how we look after your investment.
The child’s guaranteed minimum cash sum will depend on their age and how much you pay each month. At first, the guaranteed minimum cash sum will be less than the money you’ve paid in. But it’s designed to increase through the addition of bonuses.
The main long-term growth potential comes from the addition of regular bonuses and a potential final bonus. Their value is based on the profit we make, our investment returns and the way in which we distribute these to our customers, like your child. The bonuses are not guaranteed.
As a condition of the tax benefits, with the Child Bond you also get life insurance for the child. This ensures that on death the child’s estate will receive at least the guaranteed minimum cash sum plus any locked in bonuses. You should consider if this is appropriate for the child’s financial needs. The level of cover depends on their age and your payments into the Child Bond.
Starting a Child Bond with Scottish Friendly is easy.
If you apply, we suggest printing or saving a copy of this page, other relevant pages, the Key Features and 'How We Invest Your Money' guide.
Projected returns for illustration only. Remember your original investment is not guaranteed and the child could get back less than the amounts shown.
You can see in the illustrations above that the lower projected growth rate of 2% a year provide returns which are less than the total paid in over a 10 and 15 year term. This is due to the effect of charges in the first two years and cost of life cover for the duration of the bond.
Based on investments of £25 a month for a child aged 6 next birthday. *Total amount invested over 10 years is £3,000 and over 15 years £4,500. Based on current tax law, which may change.
These figures are only examples and are not guaranteed. They are based on premiums being paid for the full 10 or 15 years. They are not minimum or maximum amounts. The guaranteed minimum cash sum depends on your premium and the duration of the bond. What the child gets back depends on how the investment grows and on the tax treatment of the investment. Do not forget that inflation would reduce what the child could buy in the future with the amounts shown. (For more details on the effect of charges on the bond, please see the Key Features).
The annual rates of growth for the illustration have been based on our reasonable estimate of potential returns and are subject to the maximum projection rates permissible by the Financial Conduct Authority. All the figures include the deduction of the actual charges assumed on the bond. These charges may vary in future. Figures are only examples and the projected benefits are not guaranteed.
Each year we will send you a statement showing the bond's current value.
Scottish Friendly is not responsible for the accuracy of the information displayed on externally linked third party websites. The Scottish Friendly Group of Companies consists of the following companies: Scottish Friendly Assurance Society Limited – Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of AFM, Member of ABI: Life, Savings and Investments. Scottish Friendly Asset Managers Limited – Authorised and regulated by the Financial Conduct Authority. Member of The Investment Association. Registered in Scotland No 187215: OEIC Managers, ISA Managers. Scottish Friendly Insurance Services Limited – Authorised and regulated by the Financial Conduct Authority. Registered in Scotland No 113007. SFIS (Nominees) Limited - Registered in Scotland No 397351. Head office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.