trustee/signatory on teenagers account

nixy

A friend of mine has been saving for her children for several years with the Halifax. Now her eldest is 16 they want her to open another account which she can administer herself. My friends does not want to do this as she does not want her teenager to know how much money she has or have access to it. She wants to give it to her when she is 21. The halifax have no answer to this query. Any suggestions of how to keep the money in the child's name but not let her have access to it yet?

regularsaver1

The mother can still be trustee for her on another account that she may wish to open- However, big however, an account can not be registered for gross interest over the age of 16. She would then have to claimthe tax back from IR if in full time education

which is why they write to her

EDIT - I stress this is only on trustee accounts. If in the childs sole name it can be registered for gross interest. But otherwise it will be net

LittleVoice

regularsaver1 wrote:

T

. . . - However, big however, an account can not be registered for gross interest over the age of 16. She would then have to claimthe tax back from IR if in full time education

which is why they write to her

Anyone can complete form R85 for payment of gross interest as long as their income is low enough. There is certainly no need to go through the process of claiming it back when the tax doesn't have to be deducted in the first place.

regularsaver1

Not an a trustee account for someone over the age of 16 - it can not be applied

the 16 year old would have to have the account in their sole name and then register for gross interest

So your right - but not with a trustee account

I have opened plenly of these accounts

regularsaver1

Quote from the BBA's website:

"How long will interest continue to be paid gross on a child's account?
The registration will apply until 5th April following the child's 16th birthday. If the child does not expect to pay tax after that date, he or she can re-register in his/her own name at any time during the tax year during which they reach 16. An account held for the child in someone else's name (e.g. parent, guardian) will need to be transferred into the child's name in time for the first interest payment following their 16th birthday."

regularsaver1

Quote from the BBA's website:

"How long will interest continue to be paid gross on a child's account?
The registration will apply until 5th April following the child's 16th birthday. If the child does not expect to pay tax after that date, he or she can re-register in his/her own name at any time during the tax year during which they reach 16. An account held for the child in someone else's name (e.g. parent, guardian) will need to be transferred into the child's name in time for the first interest payment following their 16th birthday."

and from another site:

"and if the account is not in the child’s name, it must be transferred into their name before the first interest payment made in the tax year after they become 16 for the R85 to be considered valid."

Chrismaths

It's a bare trust. That mean the child is absolutely entitled to the money at age 18. So long as they know about it.

Careful_ly

I would open a passbook account with a building society
The child will have to sign the opening paperwork and R85, but then Mum or Dad keeps the book and child does not know how much is in there. (Would need to intercept the yearly statement)!
At 16 an ISA could be opened, which would perhaps be an idea if the child is going to be earning, rather than being in full time education, before being given the book at 21
HTH

regularsaver1

Also found this from HM site:

"What happens when a child becomes 16?
Once a form R85 is completed for a child's account it allows interest to be paid without tax taken off only until 5 April after their 16th birthday.

If a child does not expect to have to pay income tax after that date - because his or her income will still be less than the personal allowance - they can complete a fresh form R85 for interest to continue to be paid without tax taken off. The fresh form R85 can be completed at any time in the tax year in which the child will reach 16. A tax year runs from 6 April one year to 5 April the next.

If the account is not held in the child's name, for example, if it is in the name of a parent or grandparent, it must be transferred into the child's own name in time for the first interest payment in the tax year after their 16th birthday. If it is not, tax must be taken off the interest. "