Child savings in adult accounts. Any pitfalls?

notanewuser

Have been saving £100 per month for our daughter in a Halifax child's regular saver (6% AER) which matures tomorrow. In previous years I've trekked into town (only Halifax branch for 40 miles) to withdraw the funds to put into another of DD's accounts and the regualar saver has continued. They seem to have changed the way the account is treated once mature this year and I now need to make an appointment as well as trekking into town, which frankly I could do without.

There's no alternative children's account, but I bank with First Direct and my own (8%) regular saver matures within the next 2 weeks. I'm considering saving DD's £100 per month in a new FD regular. I know that usually the advice is to use your children to save on tax, but I don't pay any income tax anyway so would end up with gross interest in the end. At the end of the 12 months the sum could be removed and put into one of DD's other accounts much more easily than the Halifax way.

Is there anything I've not thought of here?

(Have too much other money elsewhere to ever be eligible for means tested benefits, so that's not a concern either.)

Own_My_Own

If you claim any benefits you can't have more than £16,000 in savings.
But I'm sure someone with more knowledge will be along soon.

notanewuser

Own_My_Own wrote: »

If you claim any benefits you can't have more than £16,000 in savings.
But I'm sure someone with more knowledge will be along soon.

Got a lot more in savings than that. But thank you.

jimjames

If it is long term savings for children then it may be worth looking at share based schemes not cash as they are likely to offer better returns over 18 years or so.

However if you are not paying tax currently then I can't see any pitfalls for the money being in your account other than benefits already mentioned and it being counted as your money as part of your estate should anything happen - but in any will it could be identified anyway.

notanewuser

jimjames wrote: »

If it is long term savings for children then it may be worth looking at share based schemes not cash as they are likely to offer better returns over 18 years or so.

However if you are not paying tax currently then I can't see any pitfalls for the money being in your account other than benefits already mentioned and it being counted as your money as part of your estate should anything happen - but in any will it could be identified anyway.

She has long term savings too.

Thanks for your help. I think I have a plan.

xylophone

Don't forget that interest generated on all capital provided by a parent (outside tax privileged accounts) in excess of £100 per annum (cumulative), is taxed at the parent's highest marginal rate. Does the interest received on your daughter's savings plus any other income you may have from taxable sources, exceed your own tax free allowance?

http://taxaid.org.uk/info/inheritance-tax/income-tax-and-gifts-from-parents


"The limit for parents is an ‘all or nothing limit’. So if the income from a parental gift is £99 per year it is taxed as income of the child, but if it is, say £102, then it is all taxed as income of the parent."

notanewuser

xylophone wrote: »

Don't forget that interest generated on all capital provided by a parent (outside tax privileged accounts) in excess of £100 per annum (cumulative), is taxed at the parent's highest marginal rate. Does the interest received on your daughter's savings plus any other income you may have from taxable sources, exceed your own tax free allowance?

http://taxaid.org.uk/info/inheritance-tax/income-tax-and-gifts-from-parents


"The limit for parents is an ‘all or nothing limit’. So if the income from a parental gift is £99 per year it is taxed as income of the child, but if it is, say £102, then it is all taxed as income of the parent."

Yes, we've discussed this before.

No, it doesn't/wouldn't take me over my personal allowance.