Tax advice of the week: Give your grandchild a bare trust

A bare trust allows you to earn up to £250,000 tax free for your grandchild through any investment.

Child trust funds and junior Isas are exempt from the £100 rule' (whereby if the interest a child earns from an investment given to them by a parent comes to £100 or more a year, it will be taxed as the parent's income).

This means parents can invest up to £3,600 a year per child without being taxed, says Tax Tips & Advice. But don't let the grandparents do it, as they can invest tax-effectively for your children in other ways.

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