Children's Savings

Freepeacesweet

My partner and I have savings for our 10-year old daughter in a Nationwide Child Trust Fund, Halifax Regular / Young Saver accounts and a Lloyds Young Saver Account. We pay money on a monthly basis into the Halifax Regular Saver, which pays 6% interest fixed for 1 year and then the balance is transferred to a Halifax Young Saver which pays 3%. We use the Lloyds account for relatives to put money in for birthdays, Christmas etc.
Our issue is that we want to save in an account that our daughter can't get her mitts on when she's of age, but there are no 'adult' accounts that pay as much interest as the kids' accounts we've already got. Is it a case of transferring whatever savings we decide to keep aside nearer the time that the accounts become her responsibility?

sterlingstash

You may need to watch out for the £100 rule before that time if you continue to move money into the Halifax Young Saver. If annual interest grows to above £200 (£100 allowance each for you and your partner) then it will all be taxable at your rate.

That won;t apply to the LLoyds account as the money is gifted from others.

In terms of keeping control of the money some others may have other advice, but I think you shouldn't really be moving savings in the child's name back into your own name, although in practice I haven;t found a problem with this when bringing matured regular saver funds into my name whilst I move them to a child trust fund.

xylophone

If you are saving in your daughter's own name outside tax privileged accounts like CTF/JISA, you are aware of the "£100" rule? Explained here http://uk.virginmoney.com/virgin/savings/learn/easy-access/index.jsphttp://uk.virginmoney.com/virgin/savings/learn/easy-access/index.jsp

She has the absolute right (at 16 or 18 as appropriate) to income and capital from any account in her name that is held in bare trust.

You can set up some other form of trust for your daughter that could hold cash/assets that would be held according to the terms of the Trust Deed but this would require specialist advice http://www.hmrc.gov.uk/trusts/types/

Otherwise you could save in accounts in your own names and hand over money as and when you see fit.

You might consider a designated account in an investment trust or OEIC- again, this remains your money and can be handed over when you see fit - example and information here http://www.sit.co.uk/products/invest...atures/how_to/

Mummy_Bee_2

Are there any children's accounts where the opening adult is allowed to be trustee until they turn 21?

That's what I was hoping to find for the same reason as think 18 too young to get control of the lump of savings we hope to build up.

Not sure where to look though!

xylophone

As far as the law is concerned, a child reaches his majority at the age of 18, (16 in Scotland).

http://www.candidmoney.com/kids/default.aspx

See post 3 above. If you wish to control the money beyond 18 you would need to set up a trust. The tax treatment can be complex and you would need specialist advice.
http://www.hmrc.gov.uk/trusts/types/minors.htm#2
http://www.lawdonut.co.uk/law/personal-law/family-trusts-and-inheritance-tax/trusts-for-children-and-other-family-22-faqs might be worth a look.

Otherwise, I suppose that you could transfer funds held in bare trust into a five year fixed rate bond held in bare trust when the child was between 15 and 16 - the child would gain control at 16/18 but would not be able to touch the money until the bond matured. In terms of tax, the £100 rule would apply until the child turned 16/18 - after that, the child could sign R85 if appropriate.

ANGLICANPAT

xylophone wrote: »

[B If you wish to control the money beyond 18 you would need to set up a trust. The tax treatment can be complex and you would need specialist advice.
http://www.hmrc.gov.uk/trusts/types/minors.htm#2
http://www.lawdonut.co.uk/law/personal-law/family-trusts-and-inheritance-tax/trusts-for-children-and-other-family-22-faqs might be worth a look.

Otherwise, I suppose that you could transfer funds held in bare trust into a five year fixed rate bond held in bare trust when the child was between 15 and 16 - the child would gain control at 16/18 but would not be able to touch the money until the bond matured. In terms of tax, the £100 rule would apply until the child turned 16/18 - after that, the child could sign R85 if appropriate.

Ah, seems like a brilliant idea that- just what I need to do when the bare trust Im arranging is due to mature . Thats put a smile on my face, thanks!