Use your child - best child savings account

ReportInvestor

Jake'sGran wrote:

QUOTE
Rich child's grandparents, aunts, uncles give a child £95K to as a deposit towards a Chelsea pad after uni - not taxable. END OF QUOTE

Reportinvestor - should this not say "providing they live seven years longer after the gift", or have I missed something?

Yes. But only that 7 year limit only applies if:

a) Their estate is above the IHT limit.
b) They haven't given the money in IHT Tax free £3K chunks each year (or additional £250 personal gifts).
c) They haven't given additional money as part of a regular donation out of income that doesn't affect their standard of living.

If you are rich you pay tax accountants to sort these things out.

ReportInvestor

khanom wrote:

The only other tax implications of making cash gifts is the possible spectre of inheritance tax if the donor dies within seven years of making it. And a quick warning, for those bright sparks thinking, “if I gave my brother’s kids £10,000 and he gave mine the same….”, well good thought, but no cigar. If the Inland Revenue spots you, you’re in trouble.

This is a paragraph from the 'child saving' page. I'm a bit lost here. Can anyone explain it to me pls? thanx

Everyone has a £3K annual gift allowance that is free from inheritance tax.

Above that you can give what you like and it becomes a PET (Potentially Exempt Transfer). This is potentially exempt from IHT if you live for 7 years. If you die within 3 years and your estate is liable for IHT there is still a 40% tax to pay. If you live for over 3 years there is a sliding scale of IHT on the gift that declines by 8% pa - 32%/24%/16%/8%/0%.

Tricks to get round this are not only to be frowned on, but could also land you in serious trouble with the Revenue.

ReportInvestor

khanom wrote:

Hi people
Just looking for some clarification here. I went to open a Halifax Childrens Regular Savers account today. They said only one parent and one grandparent is allowed to open an account for a given child. Have the rules changed since the write up of the site? Where it said loads of people can open an account for a given child. Have I understood this wrong, or have I been given the wrong information by the Halifax staff?

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1089574348,16470,

The rules may have changed.

Equally we all have experience of mistakes by branch staff.

Maybe the best thing is to get clarification in writing and report back?

You will have to do this. I've just checked the online terms & conditions for you and there is no specific limit mentioned

Which increases the chance for brach staff errors on the subject.

ReportInvestor

Dear khanom,

Please, please don't feel that you have been ignored .

We love Newbies on this section of the site .

If we pass over a post, please forgive us . Our only, unacceptable, excuse is that the pay around here doesn't come even close to the minimum wage :rotfl: .

We would love you to join us and post some more .

We all learn from each other in the long term.

khanom_2

Its ok Jakesgran, my queries have been answered now.;)

ReportInvestor. Thank you for answering my posts. I shall go into the branch and query it again.

Thanks also for my welcome post. :j made my day, when I got the replys. I shall try and be a bit more patient in future

khanom_2

Hi just wanted to report back incase anyone was interested. I went back to Halifax to question whether there was a limit to the number of trustees opening a regular young savers account for a given child. The answer this time, after a lot of deliberation and collaboration with variuous members of higher level staff, was no. There is no limit.

Anyway, the save4it account is capped at £5k. What does one do if they want to continue saving for their child after this? Any one know? Thanx

ReportInvestor

Thanks for that very useful feedback, k.

Saffron BS Ladbird looks best for a basic instand access account @ 5.3%.
Scarborough BS Children's Bond @ 5.75% is a 3 year regular saver account if you want to continue monthly saving.

Have you thought of regular monthly investments into the stock market?

The monthly aspect helps to iron out some of the risk, and, with children, depending on their ages, there can be a long time period for the investment - which is also more suited to stock market investment.

Threadbear_2

My two children C (aged 4) and A (aged 3) are getting a gift of 12.5k each as a present from Granny. She wants to avoid us paying IHT so wants to gift it now and survive the next 7 years (many more hopefully). She hopes the money will be used for school/uni fees, so possibly from age 11 onwards.
Please can you suggest a good way to invest. I would be really happy to have some in a high interest account and some in a higher risk environment, in the hope of higher gains.

I would really appreciate any input as I struggle not to squander my own cash.

Be sweet...help a newbie :A

Threadbear

Moonbeam

Hi Threadbear

Sounds like you should use a spread of investments/savings to meet your children's needs - a basic childrens account with a few thousand in it for instant access, a bond for a fixed period i.e. NS&I (limited risk) and possibly a higher risk investment - for investment advice you could go to an IFA or see what free (if biased) advise you can pick up from the local branches of banks nearby.....

I would try to think short/medium and longterm to spread the risk - and you can always move money from one thing to another as they get older and nearer the time they want to spend it to reduce the long-term risks......

Nothing too specific, but hope it helps.....If you want to think really long-term you could also start a pension for them - we have one for our son and are paying £10 per month into it, but this is alongside other short/medium/long-term investments & savings......

Miss_Bliss

Hi, I am coming to the 12month of my child's Halifax 10% regular saver. I went into my branch and asked about the interest if it's over £100 a year, and he said children are not taxed. I assured him they are (as on your site) and he said they aren't. Is the best advice to ask his grandma to open a high interest child's saving account for him? the less tax the better!
Thanks for your advice in advance, but I think the answer is yes... be grateful for clarification.