Use your child - best child savings account

webwiz

Could I loan my 2 year old grandson a sum of money that either I or his mother (my daughter) would invest in a savings account on his behalf. The money would belong to him, but he would also have a debt to me. When and if I needed the loan repaid I would trust my daughter to do so. It seems to me that up to £100,000 could be invested tax free by this method - or am I missing something?

baby_boomer

webwiz wrote: »

am I missing something?

It's called tax evasion and the Revenue would have you for breakfast!

Whoever heard of an unsolicited loan to a baby :eek: . There are enough problems caused by unsolicited loans to adults .

rabialiones

if an account is opened for a child by a grandparent being trustee, and a parent of the child deposits money into this account,
who does this money belong to - child, grandparent or parent who made deposit.
please help
thanks

baby_boomer

It belongs to the child & is controlled by the grandparent - but if the parent has given the money then it's all going to be taxable at the parent's top rate of tax if the interest is more than £100 in one tax year.

Is the best children's account at the moment a Northern Rock 7% 5 year Fixed Rate Bond?

info_maniac

Hello

I plan to open the Halifax Children's Regular Saver (10% AER) account for my son who is around 20 months old. I plan to make regular deposits of £100 every month into the account.

However, I was thinking of using the drip-feed method to maximise the interest that can be earned on the £1200 I have kept aside for the Halifax Children's Regular Saver account.

I have these questions:

1/ Instead of drip-feeding from my savings account I thought of opening an Instant access (no notice) children's savings account in my son's name with another bank or BS and transfer the £1200 into this new account and then set up a standing order from this savings account to pay £100 every month to the Halifax Children's Regular Saver account.

However, I am not sure whether there is a facility of setting up standing orders from the children savings accounts. Also, I know that payments to the halifax children regular saver cannot be made from Halifax savings accounts - especially the Halifax save4it children's account.

I need the ability to manage the accounts online, so the best rate options which I came across are Nationwide Smart account & Natwest Young Saver savings account.

Presently Natwest are having a £50 cashback promotion as well, which will be a bonus if I am able to set-up the standing orders properly in between mine and my son's two accounts.

I need advice on this. I would be grateful, if someone can give me suggestions on this if they find any problem with the above. Also, I am aware of the HMRC £100 interest limit for each child by each parent.

2/ As the Halifax Children's Regular Saver account benefits will be there for only an year, I may plan to tranfer all the money back to my savings/current account. Is that allowed? Can there be a problem with this, if I tranfer all the principal amount + interest earned back to my current account? Will this be a possible HMRC rule voilation?

I am worried becaue after so much juggle for a £100, I should not end up being questioned by HMRC.

Thanks in advance.

mollymania

Need some advice i have been paying into a junior bond for my daughter for past 4 yrs, it is a unit linked endowment policy, is this a bad thing and should it move elsewhere if so where?

Froggitt

I suggest you ask this question in the mortgages and endowment forum. Did you get advice when you bought it......I cant imagine any IFA recommending this kind of product for a child.

mollymania

i will do that thanks. yes we did get advice it was an ifa that sold it to us!

Froggitt

I bet be pocketed a nice fat lazy commission for that advice.

girlatplay

info_maniac I don't think you could transfer the funds back to your account from the Halifax Regular Saver unless you either then move them to a different account in your child's name or show that you are using the funds for the benefit of your child. It looks like tax evasion otherwise.