SAVINGS OPTIONS FOR CHILDREN

Up to £4,080 a year can be saved in a Junior Isa, or Jisa, for this tax year, rising to £4,128 for the 2017-18 tax year, for a child under 18. Capital gains and income are tax free. The allowance can be split between cash and stocks and shares.

The 2016-17 tax year ends on April 5, so you have just days in which to make use of the allowance.

Jisas cannot be opened by anyone other than the child’s parents or guardians.

The money cannot be withdrawn until age 18, unless the child is terminally ill. At 18 the money falls into the child’s hands, and is theirs to invest or encash as they wish.

Junior self-invested personal pensions (Sipps): anyone can contribute £3,600 to a pension per year, even if they have no earnings. This money gets the usual 20pc tax relief, meaning up to £2,880 can be contributed; the tax relief comes in at £720.

The savings are tied up for far longer than a Jisa – until the child reaches 55 (under current legislation). It may be better, therefore, to first invest in a Jisa and put any further savings in the pension.

Your own Isa: if you are not using up your full Isa allowance each year, you can invest for your children in that. The limit for this tax year is £15,240 but it rises to £20,000 from April 6. Investing the money through your own Isa has the benefit of giving parents control over the money even when the child reaches 18. However, grandparents and friends may be less willing to contribute because the money is not ringfenced.

See Telegraph Money’s selection of top funds at telegraph.co.uk/ go/25funds