Use your child - best child savings account

hungrynurse_2

anyone know what the money off vouchers from nationwide are?

jdwmfc

We are looking to open an account for our first child.
We will hvae about £1000 to put in when first opened and want to add £50 a month. (to start)
I think that I would like it as a trust were he can't touch it until he is 21, but I can only see ones where he is allowed to access the money at 18.
I want the maximum investment for him, either for paying Uni fees or setting him up in a small business or house.
Basically I don't want him anywhere near the money until I know he will use it wisely.
Any suggestions?

Froggitt

Set up a trust or an account etc, and just dont tell him about its existance.....you cant spend what you dont know about.

Remember the taxman will come after you for tax on the interest if you give him money grossing more than £100 in interest, so if you dont do ISAs etc, maybe do one in your name, but you know its his money.

jdwmfc

Thanks for the quick response.

mhd

I have two children 4 & 9.

Both have had nationwide Smartsave accounts since birth which currently pays only 0.75% interest.

My four year old has about £5K and my elder son has around £9K in their accounts.

All the money is from Child benefits and Child Tax Credit since birth.(This has now stopped as we are now over the earning limit). We have never had any donations from parents or any other family paid into these accounts.

I was thinking about closing these accounts and moving them to Northern Rocks Little rock account which pays 3% but they said that the savings will be liable to to tax becasue it they will get more than £100 interest.

1) Is this correct?
2) Any advice on how i should invest the childrens money without taking any risks please would be much appreciated.

Thanks

Reaper

mhd wrote: »

I have two children 4 & 9.

Both have had nationwide Smartsave accounts since birth which currently pays only 0.75% interest.

My four year old has about £5K and my elder son has around £9K in their accounts.

All the money is from Child benefits and Child Tax Credit since birth.(This has now stopped as we are now over the earning limit). We have never had any donations from parents or any other family paid into these accounts.

I was thinking about closing these accounts and moving them to Northern Rocks Little rock account which pays 3% but they said that the savings will be liable to to tax becasue it they will get more than £100 interest.

1) Is this correct?

Yes. The benefits were paid to you as parents not the children. Any money put into a child's account that is the parent's money gets taxed if the interest amounts to more than £100. The only reason you are not already paying tax on the Smartsave account is because the interest rate is so appalling it has not reached £100, but that is hardly a good reason for leaving it there.

2) Any advice on how i should invest the childrens money without taking any risks please would be much appreciated.

There is no such thing as "no risk". By choosing to have the money in an account that pays less than inflation it is declining in value. The risk is just different to investing it.

If you are set on savings accounts then read Martin's article on child savings accounts. From what I remember the Northern Rock account is one of the best.

If you don't want to pay tax on it then the alternatives are to put it in a Child Trust Fund if either child has one, or Junior ISAs when they come put later in the year, or even your own ISAs if you haven't used up your limits.

mhd

Reaper

Many thanks for your speedy response, much appreciated.

I've used up both mine and wife's ISA allowance this year so instead of hanging around for Junior ISAs later this year, I'm going to go with the little rock account from Northern Rock as it's 2.25% more than what Nationwide are paying at the moment.

Thanks again
MHD

Froggitt

Remember each child is allowed £100 of interest from capital supplied by each parent. So £2500 each to child 1 is £75 of interest from each parent and is OK. Do the same with child 2. The rest.....dunno......premium bonds, or national savings?

mhd

Froggitt wrote: »

Remember each child is allowed £100 of interest from capital supplied by each parent. So £2500 each to child 1 is £75 of interest from each parent and is OK. Do the same with child 2. The rest.....dunno......premium bonds, or national savings?

Thanks Froggitt

DirtyDollie

Does anyone know about buying shares for children?

I was thinking about buying shares for a friend's baby as a one-off present, rather than committing to a certain amount per month.

Obviously tax-efficiency is a major bonus!