Putting some money away for my God-daughter

Tino_2

I've just been asked to be a Godfather to my friend's daughter ahead of her Christening and 1st birthday in July.

I want to open some sort of savings/investment account as a gift that I can put a little into when I can spare it, and give to her when she's 18 or 21.

Not really sure where to start though - I'm happy to lock the money into something for 15+ years and just want the best return on my savings for her.

Also, are there any tips regarding avoid tax on those savings as the money is going to someone else?

Any advice greatly appreciated.

Thanks,
Martin

Primrose

I'd be tempted to look at unit trusts rather than cash. Over 18 or 21 years it shoudl show a much greater rate of return. Some unit trusts allow you to make intermittent savings of as little as £50 at a time but unless you made these payments into an ISA in your own name they'll be taxable.

The other way would be to open a savings account in her name and get her parents to apply for a form R 85 (I think this is the number) so that interest can be paid gross. However, they may have to keep the passbook and there would be nothing preventing them withdrawing the money early which is probably not what you want to happen.

If you want the money to be a surprise, then I'll think you'll have to put whatever account you open in your own name, and apart from an ISA or National savings certificates, it would be subject to tax.

Luckystar

You can open a childrens savings account with you named on behalf of the child, however you will need some ID for the child (birth certificate/passport) so you could maybe tell your friend your plan and she may let you borrow it or go with you to the bank/building society to open the account. She would need to sign the R85 for gross tax registration as that has been to a parent. That way only you will have access to the money until the child reaches 16 (they have to resign for tax purposes once they receive an NI number). At that stage you could rethink as at 16 there is a greater choice of savings options, hope that helps.