Personal Pensions - You can pay up to £3600 gross a year into a personal stakeholder pension plan for your children. You will still retain basic rate tax relief out of your contributions meaning the net cost to you would be £2808. You should remember that they cannot take the benefits until they are at least 50 years old.

Children`s Income - Children are entitled to full personal allowance and lower rate tax bands. The income of your children is their`s in their own right, no matter how young they are. There are certain exceptions where income comes directly, or indirectly from you, which may still be treated as your income.