Income Support and Child Benefit Savings

System

The fact that it is child benefit is immaterial. The CB is paid to the parent and not the child. The parent is putting money (that just so happens to equal the CB) into the children's accounts. This is no different to the parent putting part of their IS into the children's account.

It must be declared to DWP unless the accounts are of a type that are exempt (I.E. locked until 18, can not withdraw etc)

HappyMJ

Mojisola wrote: »

CB is given to parents to help with the costs of raising children - not for savings. If she's had enough income not to need this money for daily living up til now, she's been lucky.

Now things have changed and the money will have to be used for day-to-day spending.

A lot of people save the child benefit. Yes the OP may be on Income Support and other benefits but also may be receiving quite reasonable CSA payments from the chidrens father. She can still claim Income Support and Child Tax Credits and may have an excess of income that she opts to give to her children (as savings or pocket money or whatever). It does not have to be used for day-to-day spending. It should be structured in a way so that it does not count so I would recommend as soon as they turn 11 to get them to open a current account in their own name and start sending that money directly to that account and encourage their child to not spend it. Technically, as it is no longer her money she has no right to expect the children to save it and the child can do whatever they want with it.

HappyMJ

Mojisola wrote: »

Bad advice. Read up on deprivation of capital.

Holidays are permitted expenses for DofC.

Mojisola

HappyMJ wrote: »

Holidays are permitted expenses for DofC.

HappyMJ wrote: »

She could go on a holiday of a lifetime saying that she was saving the money for exactly that purpose as holidays of a lifetime do cost thousands.

Not extremely expensive holidays that just happen to reduce the capital to the point so that someone can claim means tested benefits.

Mojisola

HappyMJ wrote: »

A lot of people save the child benefit. Yes the OP may be on Income Support and other benefits but also may be receiving quite reasonable CSA payments from the chidrens father. She can still claim Income Support and Child Tax Credits and may have an excess of income that she opts to give to her children (as savings or pocket money or whatever). It does not have to be used for day-to-day spending.

But if it is saved and that pushes the family's capital above the permitted limits then she won't be entitled to IS any more.

HappyMJ

Mojisola wrote: »

Not extremely expensive holidays that just happen to reduce the capital to the point so that someone can claim means tested benefits.

They are already on means-tested benefits. I guess they are about to hit that limit and spending it on anything is permitted. Even expensive holidays.

Mojisola wrote: »

But if it is saved and that pushes the family's capital above the permitted limits then she won't be entitled to IS any more.

Then she best start giving it directly to the child and stop holding it in trust where ownership and beneficial ownership is confused.

The childs capital does not count as the family's capital for means tested benefit unless it's transferred to the child to get means tested benefits. If it's all just given to the child in one go but on the provision that it's returned at a later date then it isn't exempt but if small amounts are given each week and the child chooses not to spend it then it does not count.

blondie7

I think you might find its younger that 11 years to have your own account, my kids were 7 years when they got their account.

mo786

Thank you all for your replies/advice.

As she has not got a car, I am going to advise her to purchase a (newish) second hand car and then to spend/cash out the Child Benefit on a regular basis.

I know there a depreciation issue with the car but at least it will have a reasonable resale value, anything else e.g. holiday etc, the money will be gone forever.

The money is/was for the kids futures, college/uni/etc.

HappyMJ

mo786 wrote: »

Thank you all for your replies/advice.

As she has not got a car, I am going to advise her to purchase a (newish) second hand car and then to spend/cash out the Child Benefit on a regular basis.

I know there a depreciation issue with the car but at least it will have a reasonable resale value, anything else e.g. holiday etc, the money will be gone forever.

The money is/was for the kids futures, college/uni/etc.

How old are the kids? How about the friendly society bonds I referred to earlier? It's only £25 a month per child but it'll lock up some portion of the excess money until the kids are 18/21.

mo786

HappyMJ wrote: »

How old are the kids? How about the friendly society bonds I referred to earlier? It's only £25 a month per child but it'll lock up some portion of the excess money until the kids are 18/21.

I think she would still like access to the money just in case of an emergency.