Saving a lump sum but still wanting to pay into it for an 18 year old

Costy

I have been saving since the birth of my sons, the idea was to be able to help them with a deposit to buy a house when the time comes. My eldest is now 18, and in college. I've had two bonds with Family Assurance running for him, and have paid a total of £25 a month, £10 in one and £15 in the other. They now total around £5200, still waiting for the statement on the second one. We have had a discussion about it, and he is quite willing for me to invest the money, and I am willing to continue to pay into it. Where would be the best place to put the money? I currently have a cash ISA with £3k in it in my name.

TheSenSibleOne

your best bet would be acash ISA (unless you have already opened one this tax year) as you would earn interest on the lump sum and still be able to pay more in. Plus they are tax free

xylophone

I take it that these were those tax exempt friendly society bonds into which parents could pay up to £25 a month for a certain number of years?Your son can open a cash ISA in his own name with the £5200 - you can add enough to bring the balance up to £5640.
He can then open an internet saver and you can set up a monthly standing order into it - if he is a non-taxpayer then he can complete an
R85 to have the interest paid gross.

See http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm - in view of the fact that he is likely to be going to University note "exempt maintenance payments".