Buying shares for children

robatwork

Hi,
I want to buy a few shares for my children to get them interested in investing. This will only be a couple of hundred ££ worth so I need a cheap broker - I would really like to put them in their name rather than mine.

Does anyone know of a broker that will let me do this?
many thanks

atush

Why individual shares? Why not funds/investment trusts?

I did involve my children in shares when they were older Ie teens, but saved for them in investment trusts when they were younger. There are plenty of things to learn about investing this way (that companies can own shares in other companies, Pound cost averaging/smoothing volatility by investing monthly, the difference between income/yield and growth, saving a small amt each month ends up be a very large pot etc).

Investing in single shares can be interesting, but is more like teaching them to gamble responsibly (hence my waiting until they are older)

xylophone

http://www.companylawclub.co.uk/topics/can_a_child_own_shares.shtml

might be of interest.



It would be possible to set up a bare trust and hold the shares for the children until they are 18.

By way of example see See below from the HL Guide to Investing for Children https://www.hl.co.uk/free-guides/investing-for-children

Bare trusts are the simplest type of trust and are
created when you make a gift into a designated
investment account with the intention of creating
a trust. The child is the beneficiary and there are
normally two adults acting as trustees. The child
becomes automatically entitled to the investments
at 18. However, as a trustee, you may be able to
distribute money earlier if you need to, for
example to meet school fees.
There is no charge for setting up a bare trust
designated account through Vantage. It is easy:
first read the enclosed Terms & Conditions and
Key Features then you can simply set up a Vantage
Fund and Share Account in your name and enter
the child’s initials as the account designate. Then
you should complete and retain the bare trust
form which confirms your intention to create a
bare trust. The account will then be opened in the
name of the trustee and designated for the benefit
of the child. This means HMRC consider the
account to be belonging to the child and simply
administered by the trustee.


But note (from the same source)


Parents
Children can only benefit from tax-free income of
up to £100 a year from capital given to them by
their parents (or £200 if both parents have contributed). If they receive more, the parents
must pay tax on all interest or dividends at their
highest rate.
This rule often leads parents to choose non dividend
paying shares or growth funds for their
offspring, as there will be no income to tax, only
(hopefully) capital gains, which should fall within
the child’s annual allowance, choosing
accumulation units is not a way round this. This
will also not be a problem if the contributing
parent is a non-taxpayer.

robatwork

Atush - mine are teens and they know it will be a gamble - but I want it to be in a share they have some knowledge of. For example I bought Superdry shares as it was a brand I saw grow incredibly. They tanked due to warehousing problems, then recovered. Still pretty strong from the looks of most high streets.

Xylo - thanks for the link - yep I have found a couple of brokers who can open accounts in bare trust. Unfortunately the cheapest so far is £12.50 per trade, which takes £25 straight off any gain, so the initial investment will have to be several hundred to make it not totally pointless.