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Tax-efficient investments for a child

Imagine what your child could do with a tidy lump sum on their 18th, 21st or 25th birthday. They might put it towards their first car or university tuition fees. Our Junior Bond lets you invest regular set amounts, over the long-term, and help give a child those choices in the future.

As long as you’re over 18, you can open one for any child who’s 15 or younger. But you’ll need to check that they don’t already have one or if they do that they’re not already using their Tax-Exempt Savings Plan (TESP) allowance of £25 a month or £270 a year to the full.

So it can make the most of the money, our Junior Bond is invested in a tax-exempt fund. The final lump sum the child receives is free from income tax and capital gains tax provided you’ve paid into the Junior Bond for at least 10 years. As our Junior Bond invests in stocks and shares, it's worth remembering that its value can fall as well as rise. This is normal for this kind of investment, but it does mean the child could get back less than has been paid in.

Please remember that tax advantages depend on the child's individual circumstances, and could change in the future.

UP TO

£25

E-VOUCHER

We’d like to give you a little gift to say thank you for your application. Open our Junior Bond online and set up a Direct Debit between £15 and £24.99, and we’ll send you £15 Boots e-voucher. Set a Direct Debit for £25 and we’ll send you a £25 Boots e-voucher.See terms and conditions »

How much? How long? Your choice

You can invest from £15 to £25 a month (or £165 to £270 annually) over a fixed period – anywhere between 10 and 25 years. So you choose when the child gets the money. It could make a wonderful birthday present on their 18th, 21st or 25th birthday.

Junior Bond sign post illustration

How could their investment grow?

With the Junior Bond, you’re investing in stocks and shares, so there’s good potential for the child’s investment to grow over the long-term. In fact, over every 18-year period in the last 50 years, stocks and shares have generally given better returns than bank or building society accounts* (where the money you put in is protected).

Of course, good returns in the past don’t guarantee good returns in the future. And because the Junior Bond invests in stocks and shares, its value can fall as well as rise. This is normal for investments in stocks and shares, but it does mean the child could get back less than you’ve paid in.

*Source: Barclays equity gilt study February 2015. Average annual real rate of return based on Barclays indices.

Coins Illustration

Read more about how stocks and shares have performed against cash*  »

*Please note that the information provided is for your reference only and is based on general market information, not our own data.

See how the child’s investment
might grow with them*

If the Junior Bond grows over 18 years by...

Junior

*Important note
The figures shown in this illustration are based on a Junior Bond taken out for a child from their birth where you’ve selected an initial payment term of 18 years and want to pay £25 a month. The figures include the initial charge and annual management charge, and are based on the estimated other expenses for the Sovereign fund. These figures are only examples and are not guaranteed. They are not a reliable indicator of future performance. What the child gets back will depend on how the investment grows. They could get back more or less than this. Most friendly societies use the same rates of growth but their charges may vary. Over time, the cost of living will generally rise, which means the child will not be able to buy as much in the future with the amounts shown.

 

Experienced and trusted

We have 40 years' experience and look after over £7 billion of family money for over 2 million customers.

Tax-efficient

It’s a long-term savings plan, which allows you to invest for a child’s future tax efficiently, free from income and capital gains tax provided you’ve paid in for at least 10 years. Remember that tax advantages depend on your and the child's individual circumstances and may change in the future.

Good potential for growth

Our Junior Bond invests in stocks and shares so has good potential to grow over the long-term. But because the value can fall as well as rise, the child could get back less than was paid in.

Owned by you

Proud to be a mutual, we’re owned by you, our customers, so everything we do is genuinely about putting our customers first.

Easy and affordable

With our Junior Bond, you invest just £15-£25 a month for at least 10 years. For more information about eligibility see the Questions and answers section. The child will also have their JISA or CTF allowance in addition to this.

Why choose our Junior Bond?

Some more important things to note

Junior Bond books illustration

The tax advantages depend on individual circumstances

The tax advantages of the Junior Bond depend on your individual circumstances, and the child's, and could change in the future.

The Junior Bond is a ‘qualifying policy’

If the child has one of these policies, regular yearly or monthly payments will be made and the policy will have an initial payment term of at least 10 years. The policy will also include life cover. There’s an overall limit of £3,600 a year per child on the amount you can pay into qualifying policies. So you’ll need to check if the child has other policies like this. You can find out more about this limit on the Junior Bond application pages in the Junior Bond application pack.

Picking a fund

Both of our Junior Bond funds aim to grow over the long-term, but invest differently.

Family
Sovereign
Fund

This fund invests in a wide range of investments, mainly UK
and overseas shares, fixed-interest investments, property and
alternative investments (like hedge funds
and money market instruments).

Please read the Important Information Booklet »

Family Sovereign Fund factsheet »

Apply online

or

Family Charities Ethical Exempt
Fund

This fund is currently only invested in the Family Charities
Ethical Trust, which invests mainly in UK shares of companies
in the FTSE4Good UK 50 Index*.

Please read the Important Information Booklet »

Family Charities Ethical Exempt Fund factsheet »

Apply online

* All rights in the FTSE4Good UK 50 Index (the “Index”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence. The Family Charities Ethical Exempt Fund the Fund has been developed solely by OneFamily. The Index is calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Fund and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Fund. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Fund or the suitability of the Index for the purpose to which it is being put by OneFamily.

Questions and answers about our Junior Bond

Who is eligible for a Junior Bond?

If you’re 18 or over you can open a Junior Bond for any child aged 15 and under.

How much can I invest?

Because of the favourable tax treatment, the Government has set maximum limits of £25 a month or £270 per year. But you can however choose to invest between £15 and £25 a month or between £165 and £270 a year by regular Direct Debit. Please note any gift options apply to monthly payment options only. Please call us for more details.

There is also an overall limit of £3600 a year that can be paid into qualifying policies (the Junior Bond is a qualifying policy). If you have one of these policies, regular yearly or monthly payments will be made and the policy will have an initial payment term of at least 10 years. The policy will also include some life cover.

What are Tax Exempt Savings Plans (TESPs)?

Tax Exempt Savings Plans (TESPs) are a way you can save tax-efficiently over the long term. They provide a tax-free lump sum at the end of the payment term you choose; payments must be paid for at least 10 years. TESPs are exclusively available from friendly societies, like OneFamily.

How long can I invest for?

The payment term you choose can be between 10 and 25 years, but they must be in full years. You can decide the payment term when you apply.

What if I change my mind?

You have 30 days to cancel the Junior Bond. If you wish to cancel, please complete the cancellation notice included in your Welcome Pack. Any money you have paid in will be returned to you in full.

What happens if I want to cash it in early?

A Junior Bond has no cash in value in its first year. If the Bond is cashed in between years 2 and 10, the policy value less a £50 charge will be paid.

Please remember if the Junior Bond is cashed in before its 10th anniversary, you may have to pay tax on any growth. This type of investment has to be invested for, at least, 10 years to be tax-efficient. See the “Withdrawals and closing the Junior Bond" section in the Important Information Booklet.

Where will the money be invested?

You can choose to invest in either the Family Sovereign Fund or the Family Charities Ethical Exempt Fund. You can find out more about how these funds invest by downloading the fund factsheets available on this page. Please see Important Information Booklet for more details.

What are the charges?

  • An initial set up charge of £60 will be taken from the first year's payments. We also apply an annual management charge of 1.5% of the fund value.
  • A charge will also be taken for the child's life cover whenever the current value of the Junior Bond is lower than the sum assured. This charge is taken yearly, on the anniversary of the Bond. The charge we make for life cover depends on the child's age and the current value of the Bond when we take the charge.
  • Expenses are also deducted from the Family Sovereign Fund. These can change but they are currently estimated to be no greater than 0.6% each year (correct as at 31st August 2014).
  • If the policy is cashed-in between years 2 and 10, the child will receive the policy value less a £50 charge. Tax may also be payable. See "What happens at the end of the payment term?" for details about who can cash-in a Junior Bond.

 

What happens at the end of the payment term?

At the end of the payment term there are three choices, which we will remind you of nearer the time. These are:

  • Continue to invest tax-efficiently by extending the Junior Bond. You can continue to make regular payments, but if the money is needed at any point, it can be accessed without penalty. And importantly, the tax-exempt status of the investment will remain.
  • Leave the money invested in a tax-exempt fund even if you don’t carry on making regular payments. The investment can simply be left where it is, without affecting its tax-exempt status. The money can be accessed at any point in the future without penalty.
  • Withdraw some or all of the money and continue to invest.

See the “Withdrawals and closing the Junior Bond" section in the Important Information Booklet for more details on who can cash-in a Junior Bond.

What about tax?

The Junior Bond is invested in a tax-exempt fund, although income received by the fund may be taxed before we receive it.

The final sum you receive will be free from Income Tax and Capital Gains Tax, as long as you make payments for at least 10 years. The tax advantages of the Junior Bond depend on your individual circumstances and the child's and could change in the future.

Are TESPS covered by the Financial Services Compensation Scheme (FSCS)?

Yes TESPs are covered by the Financial Services Compensation Scheme (FSCS). You may qualify for compensation from the FSCS if we fail or go bankrupt. Circumstances vary, but most types of long term investments like the Junior Bond are covered for 100% of the claim with no upper limit. If you’d like more information about the FSCS, please visit www.fscs.org.uk

Ready to apply?

TALK TO US

You can also apply over the phone by calling us free on:

0800 731 7433*

We'll be here from 9am to 7pm Monday to Friday and 9am to 1pm on a Saturday.

*We might record your call to help improve our training and for security purposes. We hope you don't mind. Calls to 0800 numbers are normally free from UK landlines and mobile phones.

REQUEST A PACK

If you prefer, we can post you our full application pack, for you to read and share with your family members.

Request a pack »


To help you decide, please read the Important Information booklet and fund factsheet...

Important Information booklet (Junior Bond)

Family Sovereign Fund factsheet

Family Charities Ethical Exempt Fund factsheet


Apply online

Once you've read and understood the Important Information booklet and fund factsheets - and you know which fund you want - you can apply right here, online in just 10 minutes.

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As OneFamily does not provide advice, please read all the product info and remember your child's capital is at risk.

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