IT’S more than a year since Help to Buy ISAs were launched, writes Brewin Dolphin's Jo Jackson.

These savings vehicles are designed to help first-time buyers save up the hefty deposit needed to buy a home in a booming property market.

The average home in the North-East is around £160,000, according to figures from the Office for National Statistics.

Many first-time buyers need to put down a ten to 20 per cent deposit, which means they need to have between £16,000 and £32,000 in the bank to buy a house.

The Help to Buy ISA is designed to help, as money saved into it is given a 25 per cent boost by the Government when it is used to buy a home.

This bonus is capped at a maximum of £3,000, so the maximum value worth saving into the ISA is £12,000.

Individuals also need to save at least £1,600 to qualify for the bonus.

As with a normal ISA, the money held within a Help to Buy ISA isn’t liable to income tax on the interest.

With rates of up to four per cent, any first-time buyer should consider saving within one.

The drawback to the Help to Buy ISA is that you cannot open one if you already own property.

But with parents and grandparents already helping fund many first house purchases, a Help to Buy ISA could help you reduce the inheritance tax liability on your estate (you can gift up to £3,000 a year), while also helping your children onto the property ladder.

The Help to Buy ISA is a great incentive.

We always try to get our children to develop good habits and saving is a great habit to have.

Incentivise the activity with a 25 per cent bonus from the Government and all of a sudden you are doing something that will help yourself.

If you have used up your own annual ISA allowance then putting money into your child’s Help to Buy ISA will help minimise how much tax you are handing over to the Government.

Just be aware the ISA must be in their name and you are giving them the money.

You can’t shelter your money from the taxman in your child’s Help to Buy ISA.

The other attraction for parents and grandparents is the contribution limit on Help to Buy ISAs.

You can deposit a maximum of £4,000 in the first year (a maximum opening deposit of £1,000 plus up to £200 a month after that) and then £3,000 a year (in monthly payments of up to £200) thereafter.

Under inheritance tax rules, you are allowed to give £3,000 each tax year to your child or grandchild and that money is immediately exempt from inheritance tax.

By making £200 monthly deposits into your child’s or grandchild’s Help to Buy ISA, you are helping them take advantage of a great tax break as they save for their first home – and doing a nifty piece of estate planning yourself.

(Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation, which are subject to change.)