transfers from child savers to ISA?

abitrubbish

I have been thinking recently about how best to save for my 3 young children (2, 3 & 9). I have formulated a plan, but am not sure if this will work. The plan is as follows:

1. Put £100 per month per child in the highest paying regular child savings account. This should not generate enough interest in a year to cross the £100 tax limit.

2. At the end of the saving period, put all this money (£3,600 + interest) into a fund/shares ISA in my name. This should be within the £4000 annual limit. I would split the investment 3/4 ways between a variety of funds.

3. Repeat annually, adjusting investments in ISA to become less risky as children get older.

Now as far as I can see, this method will avoid any tax on interest and provide regular investment in the shares (which spreads the risk slightly I believe).

The only problem I can see is whether I would be allowed to transfer money from the childs regular savings accounts into an ISA in my own name. These would genuinely be savings for the benefit of the children, I am not trying to take advantage of their accounts for my own benefit, I just don't know what the rules are on such things?

Does anyone know if this will be possible, or spot any other flaws in my plan?

Thanks!

agal

abitrubbish wrote: »

I have been thinking recently about how best to save for my 3 young children (2, 3 & 9). I have formulated a plan, but am not sure if this will work. The plan is as follows:

1. Put £100 per month per child in the highest paying regular child savings account. This should not generate enough interest in a year to cross the £100 tax limit.

2. At the end of the saving period, put all this money (£3,600 + interest) into a fund/shares ISA in my name. This should be within the £4000 annual limit. I would split the investment 3/4 ways between a variety of funds.

3. Repeat annually, adjusting investments in ISA to become less risky as children get older.

Now as far as I can see, this method will avoid any tax on interest and provide regular investment in the shares (which spreads the risk slightly I believe).

The only problem I can see is whether I would be allowed to transfer money from the childs regular savings accounts into an ISA in my own name. These would genuinely be savings for the benefit of the children, I am not trying to take advantage of their accounts for my own benefit, I just don't know what the rules are on such things?

Does anyone know if this will be possible, or spot any other flaws in my plan?

Thanks!

Two points;
1) Wouldn't £3600 in a regular savings account at say 10% generate approx £180 of interest? (i.e. over the £100 limit) EDIT - if you have a spouse that would be £100 x2 which solves that problem
2) As far as I know the money in the childrens' accounts remains legally yours until they are 16 so transferring it should present no difficulty (they will probably have to be present/sign their name once they are over 7 years)