Child's savings account for my own money? (lump sum)

carlsagen

Hello,

Ive been looking at saving some money and my own lloyds savings account pays little interest. my other savings account pays 4% but restricted to a maximum of £400 a month for 12 months.

Ive looked at the childs 'young saver' account which pays 2.25% up to 20k. and says I'm in control till they turn 16. My son is 3.

Excerpt;

2.25% AER / 2.23% gross variable on balances from £1 up to £20,000.
0.50% AER / gross variable on balances over £20,000.

You’re in control of the account until they turn 16
Grandparents and other relatives can help them save by setting up standing orders to pay into the account
When they turn 16, the account converts into an Easy Saver

Im wondering what restrictions i have on withdrawing that money, if its frowned upon to do this practice etc.

For reference. My wife and myself have a separate account for his savings for which relatives pay birthday money to and all the governments child benefit/allowance goes in each month.

Thanks for the advice

HappyMJ

What about regular saver accounts in your own name earning 6%?

What about current accounts earning interest at 5%?

Once you've got all them the Santander 123 account earns 3% interest with a £5 monthly charge. That's more than 2.25%.

Opening all of those accounts between yourself and your partner and you could be earning no less than 3% on around £100,000.

carlsagen

I have a deposit of around 10k to make. so most of the high interest ones restrict to £400 a month over a year before the rate drops. These are typically the instant access ones. Id prefer instant incase i need the cash rather than locking it away. so I'm looking to avoid any accounts that lock the cash away.

Ill take a look at the Regular savers earn 6% interest (HSBC, First Direct, M&S) you mention in your signature. But i suspect they have the same monthly cap amounts.

jimjames

carlsagen wrote: »

I have a deposit of around 10k to make. so most of the high interest ones restrict to £400 a month over a year before the rate drops.

No idea what you're actually looking at but none of my 5% accounts have any such restriction and have no 1 year rate drop so check the info in post #2 again.

Between 2 of you, there is the scope to get £11500 at 5% and another £10k at 4% before you even start with the 3% accounts or regular savers paying up to 6%. All of the current accounts are instant access.


Remember that childs income over £100 from money given by parents is taxed as if it's the parent's money. You might also raise questions as to why you are taking out money that is legally your childs.

xylophone

http://www.hmrc.gov.uk/manuals/saimmanual/saim2430.htm

https://www.gov.uk/savings-for-children (except that the Personal tax allowance figure should be £10,600).

http://www.thisismoney.co.uk/money/saving/article-3010018/Has-Chancellor-George-Osborne-s-radical-Budget-reform-killed-cash-Isa.html

(The Personal Tax allowance will be £11,000 in 2016-17)

"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."




Money in an account in your child's name where you are "bare trustee" belongs to your child and not to you,

carlsagen

jimjames wrote: »

No idea what you're actually looking at but none of my 5% accounts have any such restriction and have no 1 year rate drop so check the info in post #2 again.
.

First Direct
http://www1.firstdirect.com/1/2/savings/regular-savings-account
"with our Regular Saver Account - save from a minimum of £25 up to a maximum of £300 each month, up to £3,600 per year during the 12 month fixed term

6.00% AER (gross 6.00% pa) fixed for 12 months"

HSBC
http://www.hsbc.co.uk/1/2/savings-accounts/regular-savings-accounts?HBEU_dyn_lnk=SavingsAccount_FilterTool_RegularSaver_More_Btn
"Our highest savings rate
Put money aside each month and watch your balance grow with an HSBC Regular Saver. You can save up to £3,000 at a great interest rate that's fixed for 12 months - either 4% or 6% AER/gros

I can't see any other banks that have no limit on anything above 2% So in terms of a 5% or 6% savings account thats instant access and doesn't limit me to 3-5k per year... I can't find one. Who do you use?

Ive seen in some other forums of people suggesting putting money in a childs savings account as a way to hide there own money (think divorce) as its technically the childs that can loan you the money should you need it. Hence my original question. I guess from the answer that its ethically its not right to do. Thanks for clearing this up.

xylophone

that can loan you the money should you need it.

A minor child cannot enter into an agreement to lend money......

xylophone

Does your child have a JISA?

https://www.gov.uk/junior-individual-savings-accounts/overview

If you /your wife give money to your child and interest is above £100 (per parent), you should read the links in my post.

LXdaddy

Why would you want to give your money to your son (it would become HIS money not yours) in search of 2.25% when there are accounts available to you with interest rates of 6%, 5%, 4%, or 3% unless you have filled all of those already.

carlsagen

Whats the point in a 6%, 5%, 4% accounts when they are limited to the amount you can put in and generally can only have 1 per person

I get the child account is a bad idea now its been explained so thanks for that.

so to recap. i have a 10k deposit and expect to put an additional 400-1000 away a month. i can't find a 6%, 5%, 4% savings account that can do this.

SalarySlave

Hi OP. I Think there is a little confusion here. When other posters have referred to putting money into 5% or 4% accounts they are not referring to regular savers. They are referring to current accounts.

TSB £2000 max @5%
Nationwide £2500 max @5%
Lloyds £5000 max @4%

You can open one account for you and one account in your OH's name and one account as joint. So thats the above accounts times 3. More than enough to hold your £10k