Have your say on childrens' tax free savings

emmsief

Much like Child Benefit, whilst it's a nice perk, I think in these times of austerity, it would be perfectly acceptable to take this away from higher earners (which would include my household). I have a child trust fund for both my children, and have never added anything to it for one simple reason : at a certain age it automatically belongs to that child. I do save regularly for both my children, but have chosen to invest that money elsewhere as I wish to control when they get access to it (not all children as equally sensible with money at 18!).

I think the higher rate child trust funds and the surestart maternity grants for low income earners are a brilliant, and I would rather the government focus on helping those groups out (we all know children are expensive!) rather than randomly bunging a few hundred quid at everyone, when lots of those people don't need it and it doesn't make much difference to them. For me, as a middle-income family, a couple of hundred quid invested alone for 18 years seems a bit pointless really. I think that money could be better used elsewhere.

joshpape

My opinion on this is not that there is an issue with the fact the most children's savings are tax free up to their earnings threshold but more the there is a problem that if the interest earnt is over £100 from money deposited by a parent then the rest is taxed on the parents income. This seems to be so easily sidestepped it is pointless.

What is to stop a parent giving cash to a grandparent or friend to deposit in their child's account.

I do not think it would be necessary to introduce child ISAs but just to allow people of any age to open an ISA (be that with the permission of their legal guardian for under 16 year olds).

This would keep it very simple and encourage those of all ages to save.

sbaroudi

An ISA for children would be a great idea, we just missed the child trust fund by 2 years, our youngest being born in 2009. We have £50 per month transferred by standing order into a children's HSBC account with very poor interest. Any children's ISA's should be open to all children not just those born from 2011 onwards. The upper limit should be higher than that for adults to allow for university fees etc (just gone through that with my other daughter) but there should be restricition on children accessing the money until they're 18 years old so that it doesn't get squandered on rubbish.

ailuro2

Our child is too old for the trust fund.

Why not have a government backed scheme that parents could pay into to fund education and the government matched it... if the kid wasn't bright enough for Uni it could be used to get them on the job training, a course at college etc.

andy5241

As stated earlier ISA's are tax free anyway. I think it would be a good idea, but again whats going to happen to the CTF's? Would we be able to transfer these into an ISA?

greenhillsbythecoast

I wonder why the child tax benefit isn't used as the replacement for the Child Trust ISA. You save it each month into a child's tax free account.

ginawal

CTF's caused some confusion when they started, but after a couple of years most people have got used to them. Why can't we just keep opening new ones for new children, without the government's voucher? I'd like to treat my second child (not yet born!) the same as my first, but will have to hunt around to find an investment vehicle that works in the same way.

People who made full use of these accounts will save for their children anyway, but will just find a different way of doing it.

I would like to set up a no-cost account to save for my child that's in her name, but I control. Is this too much to ask?!

Zeezee_2

I'm not bothered what type of savings incentive they come up with but I think that there should be dual control with the parent and child both required to sign to access the money otherwise the kid can reach 18, withdraw the money and blow the lot on whatever they like. To me that is not what it's meant for.

It should be safeguarded so that it is used sensibly. Perhaps they could come up with some way of ensuring that the money can only be paid out for a defined list of things such as university, mortgage deposit, car, etc.

At least that way it will be used wisely.

bennett2kuk

If you could set up a children's ISA and avoid any kind of limit then I'm sure there would be plenty of people using it to store their own money.

I set up an ISA in my name for my son who was born in February this year. You have to be 16 to have your own ISA but to be honest I'd sooner it be in my name. Otherwise all the money he'll accumulate through the years will be his to withdraw for any purpose whenever he sees fit. I hope to raise him to be money savvy but I know what I'm like with frivolous spending so would prefer to hold the purse strings to be honest.

I think setting it up with limits on what you could withdraw it for is silly to be perfectly honest, who decides what the reasons are? How do you prove it? No setting it up like a trust fund with a minimum release date or set up so it requires the signature of a guarantor as well as the account owner would work. I had some inheritance and needed the confirmation of my father and our solicitor to withdraw money so that system works quite well already.

Imp65

As much as I would encourage anyone to save the problem with government schemes it is only people with spare money who can really benefit from them, so you end up with poorer working families paying income tax which subsides rich families tax free savings.

We already have this with the existing ISA's where only people with 10 grand of spare money every year can get maximum benefit from them, and I would suggest that if you are lucky enough to have that amount of spare money every year you don't really need the governments help.

For any new childrens account along the lines of an ISA I would say it does need a maximum contribution cap otherwise rich families will be able to put huge sums in and get lots of tax free interest, setting their children up for an even better financial start in adult life than the very good start they will probably get anyway ( a government funded gold spoon rather than the silver one they were born with) where as poorer families won't be able to afford to put much in and so will get very little benefit, once again poorer working families paying income tax to give to rich families that already have plenty of spare money.

On a slightly different note have other people noticed that in the past childrens accounts used to pay better interest than adults accounts but since interest rates have been low the childrens accounts seem to have been cut even more than adults and now pay hardly any interest at all. It seems that children are being hit even harder by the credit crunch than adults. The banks seem to be taking the P with children even more than they are with adults.