baby saving account.... please help!

Kim_Loves_Andy

hi there..
i am due in february but am looking to take out a savings account for when my baby is born, but as i am marrying a soldier, we will be moving countries quite often.....does anyone know a savings scheme that will benefit this?
hope you can help!

thanks
Kim and Andy

dunstonh

There is the childrens trust fund which will be available from April 2005.

The generic product received royal assent in May and the final details are being ironed out now, although product providers have been given draft guidence notes on how to operate the CTF scheme. All children born on or after 1st Sept 2002 will be eligible.

Many child savings products have been withdrawn pending release of the new product or have altered their structure of their current product to meet what they think will be the final version of the CTF.

As long as you have been awarded child benefit and elibility for the CTF accepted, a voucher worth £250 for the initial Govt payment will be sent to the child benefit claiment. It is possible to get a further £250 if you receive full tax credits.

There will be a £1200 per year allowance for the CTF account up to age 18. Any income generated within the CTF is tax free and there will be no CGT. The CTF balance will not affect family benefit and tax credits during the time it is open.

There will be a range of CTF accounts available to suit different needs.

So, basically, i suggest you wait and see.

Joe_Bloggs

@DD
Can Grandparents, family friends etc contribute and what are the tax consequences etc.
The answers to these types question should be made 'sticky' but it is wrong to rule out alternatives as the fund is still in the phase before reality.
J_B.

dunstonh

Grandparents, friends and other family can contribute but the annual limit must not exceed 1200 pounds.

From IHT point of view, its gifting and therefore gift rules and allowances apply but from the child's point of view, its tax free. Remember though that it is tied up. - at least thats how it currently stands.

Here are the key features (so far):

The Child Trust Fund is a new savings and investment account for children.

Children born on or after 1st September 2002 are eligible if child benefit has been awarded for them and they live in the UK.

There is no need for parents to claim Child Trust Fund (CTF) – Once a child benefit award has been made and eligibility for the CTF accepted, a voucher worth £250 for the initial Government payment will be sent to the child benefit claimant, who will usually be the parent. A person with parental responsibility for the child can then use the voucher to open a CTF account for that child.

An additional £250 will be paid into the CTF accounts of children in families eligible for full Child Tax Credit (CTC) with household income at or below the CTC income threshold (currently £13,480).

Parents will receive an information pack giving them details of what they need to do, and information will be available on a dedicated website and from a CTF helpline.

There will be a range of CTF accounts to suit everyone’s needs. All providers will be making available a stakeholder CTF account. Charges for this account are kept low and the account is designed to give good returns over 18 years by investing in the stock market. The risks are controlled by making sure that there is a mix of investments and that they are less risky as the child nears the age of 18.

If an account is not opened before the voucher expires (usually 12 months from issue) the Inland Revenue will open a stakeholder CTF account for that child.

Special arrangements will be made for looked after children (as child benefit cannot be claimed for these children) to ensure that they do not miss out on a CTF account.

Money for children from lower-income families and looked after children.

Parents, family and friends will be able to contribute up to a total of £1,200 a year to a CTF account. Income arising on the money and investments in a CTF account is exempt from tax.

The money in a child’s CTF account can only be taken out by the child on reaching the age of 18. There is no access to the money until then. The account and the money in it belongs to the child, although it is managed by a person with parental responsibility until the child is 16. When children reach 16 they will manage their own CTF accounts.

When a child reaches the age of 18 there will be no restriction on how they use the money in their CTF account.

Financial education is a key part of the CTF and all children will receive financial education to help them manage their money with future needs in mind. Information will be available for parents, teachers and children over the lifetime of a child’s CTF account.

The CTF account and the income and gains from that account will not affect family benefit and tax credits during the time the CTF account is open.

Note that money is tied up until age 18. Childrens "instant" savings accounts will still be available. However, there have been murmours that the tax free status of these could be removed to stop parents abusing them and encourage them to use CTF.