Use your child - best child savings account

ankuriscool

Current suggestion for Best child instant savings accounts 'for those with more to put away'. Up to £25,000 in The Family Building Society at 2.25%. Perhaps on tips summary, should include that if child earns over £100 interest (which they would 'for those with more to put away'), then the parent would be charged at their own tax rate. I think this is only for 'bank of mum and dad', whereas if that money came from grandparent account, then there would be no tax to pay?

Gill7229

Does anyone know why the Virgin money kids account has disappeared from the list of recommended accounts? I was just about to open one for my daughter but I don't see it recommended anymore. Still shows on Virgin Money as 1.75% up to £25K. I was wondering if they had announced a cut to this recently or something?

jonesMUFCforever

Gill7229 said:

Does anyone know why the Virgin money kids account has disappeared from the list of recommended accounts? I was just about to open one for my daughter but I don't see it recommended anymore. Still shows on Virgin Money as 1.75% up to £25K. I was wondering if they had announced a cut to this recently or something?

I received an e mail yesterday about cash ISA rates going down to 1% so I'm pretty sure they will be pulling those rates soon.

VJT2020

Could anybody please help me choose a savings account for my 2 nephews and niece please? They are due to receive some inheritance from my dad (their grandad) passing (their mother-my sister-has also passed away). Things are a bit strained between us and their father currently and for certain reasons we would not like him to have access to the money hence why I'm looking into it.  It will be about £10,000 each and we have been advised by our solicitor to open separate accounts for them and that online accounts will have better interest rates. They are 8, 7 and 6. Any suggestions?

xylophone

If these bequests have "indefeasibly vested" in the children (that is to say that the money is theirs absolutely and without contingency and that the only reason they may not have immediate access is by reason of their minority), then it needs to be held in individual  bare trust accounts for each child.

https://www.taxinsider.co.uk/the-bare-essentials-bare-trusts
The child will be entitled to access and control at the age of 18 (16 in Scotland).
Examples
https://www.bathbuildingsociety.co.uk/savings/personal-savings/Junior Saver
https://www.skipton.co.uk/savings/childrens/childrens-saver

The alternative would be for you to make a direct payment to each child's JISA  of up to the subscription limit for the tax year and put the balance into a bare trust account, moving it to the JISA in the following tax year.

If the children do not yet  have JISA accounts,  your brother in law could be asked to open one for each child and you could make the maximum subscription as a direct payment from the exor bank account.

Although he would be the registered contact, he could not withdraw money from the accounts - only the child could do that when he/she reached age 18.

You will notice that rates are better on JISA accounts and that JISA offers cash/stocks and shares/both,

https://www.gov.uk/junior-individual-savings-accounts

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

The other possibility would be to consider stocks and shares accounts in bare trust, if you felt that the will permitted this. You could ask the solicitor.

Example https://eumultisiteprod-live-b03cec4375574452b61bdc4e94e331e7-16cd684.s3-eu-west-1.amazonaws.com/filer_public/ce/5d/ce5d66ea-7a53-42f7-9254-f8907214781d/investfunds-trust-nodeed.pdf

A multi asset fund could suit and have the prospect of better returns for the children than cash
Examples
https://fundcentres.legalandgeneral.com/uk/Private/fund-centre/#AssetClass=Multi-asset
Or you might look at Vanguard Life Strategy funds.

Again, this can be done through a JISA (and would be better done through a JISA) . However, clearly, you need to consider the circumstances.

DragonQ

Hi all, I have a couple of questions about kids' savings accounts now that we have a baby son:

1) Tax on savings. If I understand correctly, as soon as the kid earns £200+ interest in a single year, we have to pay tax on that interest at our usual rates, regardless of when that money was given to him. So, as an example, let's assume my wife and I put away £100/mo in a Halifax Kids' Saver (paying 1.45% interest). At the start of year 11, for example, there'll be £13,200 in the account, and by the end of that year there'll be £14,400. Thus he'll earn just over £200 that year and we'll have to pay tax on all of that, right?

2) Transferring money. What happens if our kid's cash is in an account whose interest rate drops? Can we transfer that money to a new account in his name at another bank? If so, is there an official way to do this? I know ISAs can be transferred in this way but what about non-ISA children's accounts? I'm assuming we can't literally withdraw all the cash and plonk it elsewhere, since that would allow parents to just take all the money out of their kid's account and keep it for themselves.

Thanks for any help!

xylophone

https://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/families/babsi.htm
Old  guidance but the principle remains the same.

As parents you may open child savings accounts in bare trust for your child.
If you are dissatisfied with the rate on one,  you can arrange for the closure and transfer of funds to another child account.

The existing provider may well ask you to confirm that the funds are going to another account held for the benefit of your child.

Are you  against using JISAs? The interest rates are better and gifts from parents are not subject to the £100 rule.

https://www.gov.uk/junior-individual-savings-accounts 
If you wish to transfer from one JISA to another you must ask the new provider to arrange the transfer.

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

DragonQ

Thanks for the tips. I'm not against using a JISA but there are kids' regular savings accounts that pay more interest. So the plan would be to put money in the regular saver, which then matures into a normal kids' savings account after 12 months. From there we'd have to move the money into a JISA. How would we do that?

xylophone

You would open the JISA and then either transfer direct from the child saver if possible or presumably the provider of the saver would draw a cheque in the child's name for you to send to the JISA provider.

DragonQ

I see. Hopefully the account in question allows direct transfers to avoid faff with cheques!