16yr old daughters savings is it time to one into an ISA?

JMW77

My daughter has approx £3000 in savings am i right to think i should close her two small child accounts paying 1 or 2% and move it all into an ISA preferably 5 year term to avoid her spending it.

As this would be tax free for ever or ( until ISA rules change anyway ).

When child accounts went down as low as they have i opened the 6% halifax regular saving paying 6% but she is only able to complete the full year and this will close.

So i think unless anyone tells me otherwise i need to find an ISA with long term which allows more than the initial amount to be invested .

I assume i need to tell her as she would need to sign as she's 16 she has no idea what savings she has and i would of preferred her not to know .

Any advice appreciated.
Thanks

MissKitty

I have just closed down my 9 year old daughters children's saving account, she has had it since she was a baby and it used to pay really good interest but it is now only about 1%.

I was looking into junior ISA's myself last night to transfer her money into as they are better interest rates. Why don't you check out some comparison websites to see what the best paying junior ISA's are.

When she turns 18 it will change over to an adult ISA, which she will then be able to access. With junior ISA's the money cant be accessed until they turn 18 years old.

You might want to be careful about setting up an account that will hold the money for 5 years at a fixed rate, if the economy changes in the next few years and interest rates for savings gets better, you could find yourself stuck with a low interest rate on your daughters savings.

I'm looking about for something that has a good fixed rate for no more than 2 years.

atush

If at 18/19 she may go off to Uni I wouldn't put it on for 5 years just 2. But you will need her to agree with 5 years as the money is now hers.

JMW77

Yes i will compare the junior ISA i didn't realise she could have one at 16.

And to other poster money yes i am aware the money is hers but she's not having it yet , she doesn't know how hard it is in the real world so save as much as i can for her.
One day she will be grateful.

cloud_dog

JMW77 wrote: »

My daughter has approx £3000 in savings am i right to think i should close her two small child accounts paying 1 or 2% and move it all into an ISA preferably 5 year term to avoid her spending it.

As this would be tax free for ever or ( until ISA rules change anyway ).

Why the need for an ISA?

Whilst your ISA allowance is a use it or lose it yearly allowance and therefore it does make sense to use it I would have thought you would be better off finding the best savings account (fixed in this case) and then complete the Inland Revenue form R85 so as to allow your DD interest to be paid gross exactly as if it were in an ISA account.

The only reason you wouldn't do this is if she is already receiving income above her own personal income tax allowance (£7475 2011/12, £8105 2012/13).

xylophone

I assume the child accounts are in her name so see http://www.hmrc.gov.uk/tdsi/children.htm and particularly what happens when a child turns 16.