Child investment options not accessible until 18.

piggybox

Hi,

My toddler has recently inherited a few hundred pounds from their great-grandparents. I would like to invest this but one of the conditions of the inheritance is that it is not accessible by my child until 18 years old.

We have already got a junior ISA and I'm reluctant to add this money to it. Although it would make good saving sense, we are fortunate to be able to add to the ISA through other means and I would like for the inherited money not to get lost in this and be a separate pot.

Are there any other savings accounts out there for children that are not accessible until they reach 18? Most seem to be 16 tops. Any ideas welcomed.

Thanks.:)

jimjames

You say savings account which implies you are looking to keep it as cash. Over such a long time as 18 years then I'd be looking to put the money into equities so that you can beat inflation and get a better return.

The one we use is Aberdeen and the account is operated by the parent until the child is 18 but there is no set age to pass the money on.

http://www.invtrusts.co.uk/aam.nsf/InvestmentTrusts/investchildren

xylophone

Interest rates are dire at the moment.

Assuming that this is an absolute gift to your child (see http://www.hmrc.gov.uk/manuals/tsemmanual/tsem1563.htm)

You/your wife can hold the money in "bare trust" for your child - see here

http://bank.virginmoney.com/savings/learn/childrens-accounts/

Until the child is 16, an R85 can be registered on the account (assuming the child is a non taxpayer)- if the account remains in bare trust after the age of 16, the R85 must be rescinded and any overpaid tax reclaimed on R40.

It would also be possible to hold any other account in bare trust if the provider permitted.

In view of the fact that interest rates on deposit accounts are so poor, you might wish to consider an investment trust/OEIC held in bare trust, example here http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

Should such an investment pay interest rather than dividends, overpaid tax can be reclaimed on R40- a bare trust savings account would hold any such repayment - funds could be re-invested, if desired when minimum allowed in the fund had built up.

http://www.taxinsider.co.uk/763-The_Bare_Essentials_Bare_Trusts.html might be worth a look.