Plan administrator NDF is encouraging people to use their children's capital gains tax allowance to avoid paying tax on their investments.
The administrator is pushing its Extra Income & Growth Plan, underwritten by Abbey National, to take advantage of the allowance.
NDF Administration believes investors are going for income, which is taxed, rather than growth. It says they are overlooking the fact that every man, woman and child in the country is entitled to make a tax exempt gain of £7,100 a year when opting for growth options.
The NDFA plan, eligible for Isa investment, offers 30 per cent growth over three years. It allows up to £12,000 to be invested for individuals and £24,000 for couples.
A family of four could invest a total of £94,400 free of tax over a three-year period giving them a return of £28,320 tax free provided the investment remains untouched in this time.
Alternatively investors could opt for 9.25 per cent annual income or 2.2 per cent quarterly, but this income would be subject to taxation rules if held outside an Isa.
Income generated from an investment in a child's name gifted by a parent is liable to tax once it exceeds £100 a year.