This article appears as part of the Money HQ newsletter.

Putting your family first

When you’re in your 40s and 50s, you can sometimes feel like you’re financing three generations, not just one. Many people find themselves caught in the ‘sandwich’ generation – responsible for both their children’s future financial wellbeing and that of their parents. At the same time, you may also want to consolidate your own investments so you have enough money to enjoy your own retirement.

Making a multi-generational financial plan

Nowadays, more of us are thinking about financial planning for the whole family. Money is moving up, down and across generations.

Once you start to think beyond your own generation, you may discover your mindset about money changing.

Today, we’ll look at the practical ways you can start thinking and planning multi-generationally.

Are you using all your tax allowances?

We all want to save ourselves some money. So it makes sense to take advantage of the tax allowances that are right in front of us. Especially the ones we’re most familiar with, such as the annual £20,000 ISA allowance.

ISAs are simple, tax-friendly savings accounts. Cash ISAs make a good, tax-efficient home for rainy-day funds, and Stocks & Shares ISAs can provide the potential for growth from your investments. Growth that can help you achieve longer-term ambitions, from buying a new home to affording a good school.

ISAs make good sense for cross-generational saving too. Putting money aside in an ISA for long-term care costs for yourself or your loved ones, can take a weight off everybody’s mind.

Children get a tax break too

When it comes to giving your children a head start, opening a Junior ISA (JISA) for them means they can build up a tax-efficient pot of money. The maximum you can pay into a JISA is £9,000 in any tax year. This can be accessed at 18, or rolled over into a standard ISA.

It’s a great way to encourage children to save and get into good money habits early. This money might help with driving lessons, or living costs at university, or even go towards a first house deposit.

Our teenagers will have very different working lives to us, with portfolio careers and flexible working patterns. Giving them a financial head start can put them in a strong, stable position when they’re starting out.

Read more:

Money HQ | Why do we find it hard to save for our future self?

Junior pensions and pension tax relief

Many of us don’t think about our pensions until we’re well-established in our careers. However, any parent or legal guardian can open a Junior Pension for their child as soon as they’re born. You can usually only put up to £2,880 a year into a Junior Pension, and the 20% pension tax relief bumps this up to £3,600.

Those tax benefits mean that even small amounts paid in regularly can grow significantly by the time they retire themselves. Most of the tax allowances and tax reliefs you can claim are on a use-it-or-lose-it basis, so planning ahead is important.

The Herald:

How to pay less Capital Gains Tax

People often forget about their annual Capital Gains Tax (CGT) exemption too, which can also make a difference to the amount of money you have to invest, or save. CGT is the tax that you pay on the profits if you sell a property or asset that has increased in value. The current 2024/25 Tax Year CGT exemption means that the first £3,000 of profit is tax-free.

The amount of CGT you’ll pay depends on your tax band and the asset you’ve made a gain on. It’s well worth taking financial advice on this, as it is a complex area of tax planning.

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Getting on top of CGT can make a real difference to your family’s financial health.

We spend much of our lives earning, saving and investing. But just as important is knowing how and when to start spending your money or using it to help other members of the family. Moving money around the family may also mean you lower your eventual IHT bill too.

Ben Stark is a chartered financial planner with over a decade of experience advising businesses and families. He is partnered with St. James's Place Wealth Management.