Adding to BaillieGifford trust

ANGLICANPAT

Hi. A couple of years ago I contacted BG direct , and opened bare trusts (Scottish Mortgage) for my 2 grandchildren who had been left 5k each from my mother. My husband and I are trustees. We'd now like to make our own contribution to these using our £3k 'giving' allowances. Possibly now with the stock market looking lower, this might be an opportune time as well. Its now also likely we may decide to add to this similarly , every year.

My understanding is that there are no immediate tax implications for the fund unless the profits become very high , so we dont have to do /worry about doing or reporting anything on that score at the moment - is that correct? Secondly am I right in thinking its either the same or cheaper for me to deal with BG direct rather than go through an intermediate ? Thank you.

ps have noticed the BG spelling is incorrect in title but cannot amend it.

Reaper

I assume the £3,000 you refer to is the inheritance tax allowance.

On the whole you are correct. On tax...
1) A Bare Trust investment is not tax free but is taxed as belonging to the child. And as the child has their full adult tax allowance in practice that means they are unlikely to pay anything, at least until they get a job.
2) Gift from PARENTS are different. If you put money in yourself (rather then their grandmother) it is still taxed as belonging to you if the income it earns (so dividends in this case) exceeds £100 in any tax year. It is tax free if below that amount but the whole lot gets taxed at your rate if exceeded by only a penny! This is known as the £100 rule if you want to read up on it.

If you end up with a mixture of your money and the grandparents I am not sure how it is taxed but I assume pro rata.

As parents you might be better off investing in a JISA which is one of the few ways of dodging the £100 rule.

Reaper

ANGLICANPAT wrote: »

ps have noticed the BG spelling is incorrect in title but cannot amend it.

Click on "Edit", then "Go Advanced" and you will be able to change it

ANGLICANPAT

Thanks Reaper. Im their grandmother, the original funds were from their Great grandmother, so Im hoping the rule remains the same for me as for a grandmother .
Am I judging correctly on the second half of my question - no financial gain by going via an intermediary?

ps Yes it was the £3k IHT allowance. ( dont think it would make a difference though if it was over- apart from the fact the profits would rise more quickly , and in terms of IHT the seven year rule stuff would apply?)

jimjames

ANGLICANPAT wrote: »

Thanks Reaper. Im their grandmother, the original funds were from their Great grandmother, so Im hoping the rule remains the same for me as for a grandmother .
Am I judging correctly on the second half of my question - no financial gain by going via an intermediatery?

Yes, you will pay less going direct. This is one area when it's not beneficial to go via an intermediary or discount broker as they'll charge more than the trust themselves. Investment trust savings schemes are generally one of the cheapest ways to access the stock market and discount brokers can't reduce that already low cost.