childrens savings accounts

glentoran99

zolablue25 wrote: »

Surely you don't really need to be able to talk or make decisions to receive a gift?

No but you need to be able to make decisions to get the money out to buy something, and given she didn't make the decision to open the account how can a 6 month old be legally responsible for anything?

zolablue25

glentoran99 wrote: »

No but you need to be able to make decisions to get the money out to buy something, and given she didn't make the decision to open the account how can a 6 month old be legally responsible for anything?

I'll be honest, I have no idea what the actual legal situation is in this instance, but it is perfectly reasonable for a parent or guardian to make decisions for what is best for a child. I don't believe that this would affect who owns what. If the money belongs to the child but you made the decision to move it to somewhere where the child was better served then that seems fine, but if you were to take it back (as is effectively being described by the OP), then I'm not sure where the legal line is drawn.I'm sure there will be some Legal Eagle along shortly...

jimjames

You also need to remember that any interest above £100 in a child's account is taxed as if it is the parent's income.

Obviously the taxman is wise to these kind being used as tax avoidance schemes.

jimjames

glentoran99 wrote: »

So money that I put in a 6 month olds account is legally theirs? Despite them not having the capacity to talk never mind make decisions?

Yes. If you give money to someone it is then their money. You operate the account on behalf of the child but it is still their money not yours.

Remember some accounts like JISA are not accessible till 18 either.

eskbanker

jimjames wrote: »

You also need to remember that any interest above £100 in a child's account is taxed as if it is the parent's income.

Worth also noting that according to http://www.moneysavingexpert.com/savings/child-savings-tax-free#maximising it's £100 per parent, i.e. a couple can give a child enough to generate £200 interest before tax becomes an issue.

xylophone

If a parent opens a bank/building society account for a child ( or a stock market based account in bare trust), and provides the capital, then the parent has made a gift to the child and the child is the beneficial owner of the money, even though the parent may have control of the account.

The "£100 rule" applies and if the interest generated is likely to be over £100 (or £200 if both parents have supplied the capital), then an R85 cannot be completed - should either parent be a higher rate tax payer then additional tax would be due.

See http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/ under things you might like to know.

With regard to the reforms due to take place in 2016, see http://www.thisismoney.co.uk/money/saving/article-3010018/Has-Chancellor-George-Osborne-s-radical-Budget-reform-killed-cash-Isa.html

"However, what hasn’t changed is the benefits for children. Currently, children can earn only £100 in interest tax-free on money put into a savings account for them by parents.
And although under the new rules children will benefit from the tax-free interest allowance that most taxpayers will get, they will still be limited by the same £100 cap on tax-free interest on money paid into their account by their parents.
This means parents (and step-parents) can gift their children as much money as they like, but the child can still earn only up to £100 in interest in a year tax-free from any money given to them by each parent — a total of £200 in a tax year.
If it goes over this limit, the whole amount — not just the interest earned over the £100 limit — is taxed at each parent’s normal rate."

xyz123

Isn't there something about "genuine" gifts from grand parents being allowed to exceed £100 limit...

jimjames

xyz123 wrote: »

Isn't there something about "genuine" gifts from grand parents being allowed to exceed £100 limit...

Any gifts from grandparents are not covered by the £100 rule.

Westie983

childrens account at LBG are opened in the childs name with a nominated adult to control the account till 16, or earlier if they wish, at 16 the account is accessible by the child and not the nominated adult, so any money in a childrens account is the childs being controlled by the adult, so they can get the money out at 16, or earlier with account card...

With regard with the interest its £100 per adult per child per tax year, not sure about grandparents but anything over £100 is taxed at the parents tax rate..