Nowhere to put child's money!

icclebug

Great, thank you

xylophone

http://www.hmrc.gov.uk/tdsi/children.htm

I take it that these sums are absolute gifts to the child (ie they are not conditional upon the child reaching the age of 18) - that is to say that the money already belongs to the child but the parent holds it in trust simply because the child has not reached the age of majority.

If cash, you should be able to hold any account permitted by the bank or building society in bare trust for your child until the age of 18 - you could for example hold a fixed rate bond Mr X Iciclebug trustee of or re Miss Y Iciclebug.

See the link to HMRC and note the information about the R85 - if you hold the account in bare trust after the age of 16 the R85 must be rescinded and a claim made (R40) for any tax overpaid.

You could choose to invest in an OEIC or investment trust - note that if either of these should be paying interest rather than dividends a claim would need to be made for any overpaid tax as the income would be paid net.
http://www.incademy.com/courses/Unit-trusts-and-OEICs/Capital-Gains-Tax/16/1007/10002

There is some information here about holding an IT in bare trust (necessary in this case if the money has been given to the child absolutely) - do not use a mere "designated" account.

An OEIC can also be held in this way.

For tax purposes, keep a record of the fact that the capital was given to the child in a will as an absolute gift to be held by the parent as bare trustee until the age of majority.

CTF information here - https://www.gov.uk/child-trust-funds/overview the £3600 increases to £3720 in the 13-14 tax year for CTF and JISA.

JISA here https://www.gov.uk/junior-individual-savings-accounts/overview