Capital Gains Tax

Like adults, children also have their own annual capital gains tax allowance which is £9,600 for the 2008/09 tax year. This allowance applies whatever the source of the original capital, so if parents want to give substantial amounts to their children, the most tax-efficient investments will be those which are likely to produce capital growth. Even if the eventual gains exceed the annual tax-free allowance, it may still be possible to minimise tax by phasing withdrawals over more than one tax year.