A 2017 Labour Force Survey estimated that there were over 6 million fathers in the UK with at least one dependent child within the household. Millions more have offspring who’ve long since flown the coop.
And on June 16 this year, they’ll all be celebrated for their many fatherly deeds: Bad dad jokes. Lifts to the cinema. Socks and sandals (on purpose!). The lot.
So, in light of Father’s Day, we thought we’d sidestep the golf balls and novelty ties and instead gift the brilliant dads of the UK some pertinent tax and savings advice.
For the dads with kids at home
If you have little ones at home, it’s good to know that they’re not only an unlimited source of joy – they’re also crawling/walking and barely talking tax breaks and savings opportunities. For example:
- Tax-free Childcare – Did you know you can get up to £500 every 3 months (£2,000 a year) for each of your children to help with the costs of childcare? Check your eligibility here.
- Shared Parental Leave – One for fathers-to-be: You and your partner may be eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) if you’re having a baby or adopting a child. You can share up to 50 weeks of leave and up to 37 weeks of pay between you. You need to share the pay and leave in the first year after your child is born or placed with your family. There’s different criteria for birth parents and adoptive parents.
- Child Tax Credit – Universal Credit has replaced Child Tax Credit for most people. You can only make a new claim for Child Tax Credit if you receive the severe disability premium, or received it in the past month and are still eligible for it. If your child is 16, you can claim up until 31 August after their 16th birthday. Find out more here.
- Junior ISA – Minimise your tax liability with a Junior ISA. Junior Individual Savings Accounts (ISAs) are long-term, tax-free savings accounts for children. In 2019/20 tax year, the savings limit for Junior ISAs is £4,368. Not to be sniffed at! Find out more here.
- Junior SIPPs – Making a contribution to a child’s pension is completely free from UK income and capital gains taxes. What’s more, the government pays a bumper 20% tax relief on contributions. A gross Junior SIPP contribution of £3,600 would only cost £2,880.
It’s not all sunshine and rainbows when it comes to tax, savings, and children. If you have an individual annual income of over £50,000 and you or your partner receives Child Benefit, you may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’.
Use the Child Benefit tax calculator to see if you’re affected by this tax charge.
For the dads with grown up kids
Empty nest? The peace and quiet is nice, but further minimising your tax liabilities is nicer.
Inheritance Tax looms large for many, but you can take steps to soften the blow to your loved ones by giving gifts each tax year.
For starters, you can give away £3,000 worth of gifts every year (6 April to 5 April) without them being added to the value of your estate. This is what’s known as your ‘annual exemption’. Additionally, you can also give wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild; £5,000 for a child) each tax year.
For children moving out and onto further education, it can be a daunting time for both parent and child.
By gifting your adult children shares, they can receive dividends which can be used towards university living costs. The tax-free dividend allowance for 2019/20 is £2,000. That’s a lot of Pot Noodles.
Happy Father’s Day from Lloyd Piggott!
We think being a dad is one of the most rewarding jobs around. So, it makes sense that you’re fully aware of all the benefits that come with it.
Of course not everybody’s circumstances are the same and the points contained within this article are for general guidance only.
Before making any decision or taking any action you should consult with one of our team. Contact us today.