Savings For Kids Education

chateauneufdupape

I would like to maximize my capital. I have £32,000 in savings which I want to put away for the kid's education. I will need to start paying out in 6 years time. Currently, I have £12,000 in ISA's (@5.1%)and £20,000 in a Halifax online A/C (@4.9% Gross). I see that Alliance & Leicester is offering 5.35% Gross for online accounts, so it is worth changing from the Halifax. At each tax year, I intend to open new ISA's with my wife to maximize the tax free element. I pay 40% tax, but my wife does not. I want to keep the money virtually risk free. Is my plan sound or can anyone offer a better plan?



https://www.beachesrus.co.uk

Robert_Sterling_3

A noble aim.
How many kids and what are their ages?
At 16 a child can have an ISA
The amount going into a cash ISA is intended to be reduced to £1000 per annum from April 2006 I think.

You can improve a little on the current rates of interest if you can bother with chasing higher rates from time to time as often the better rates are temporary and have other disadvantages.

If you are not doing it all ready "Credit Card Sharping" can become a useful pastime.
As indeed can reading MSE's News Emails.

chateauneufdupape

2 kids aged 5 & 9. The first will be funded from monthly surplus. The 5 year old will be funded from the capital.

I have thought about chasing the short term interest rates, but it seems a big hassle to gain about £30 per year.

Bad news about the ISA if you are correct. Is there a planned alternative?

Regarding credit card sharping, yes I do that avidly!

dunstonh

CTF is introduced in April with a £1000 pa tax free allowance.

Robert_Sterling_3

I think you are on the right lines.
There may be worse news in due course re ISAs.
When they were introduced they were only guarantedd to last for 10 years. They may last longer or they may not. Rich people get more benefit from them than poor people.

Debt_Free_Chick

After ISAs, any spare cash would generate more interest if it were in your wife's name, only. As she is not a taxpayer, she can have the interest paid gross.

You would effectively have to give the capital and the account must be in her name only. If this doesn't cause you a problem, then you would benefit from all the income that would otherwise have been deducted.

Robert_Sterling_3

You would effectively have to give the capital and the account must be in her name only.

The account does not have to be in the wife's name only.
The Inland Revenue makes an assumption that money in joint accounts is owned equally but you can make a declaration that this is not the case on an Inland Revenue Form ( R17 I think).

( Not legal or financial advice just opinion )

chateauneufdupape

Thanks for the replies, my wife does pay tax but at the lower rate. All capital is already in her name, but I will look into the R17.

Robert_Sterling_3

You can see a copy of Inland Revenue Form 17

By Clicking HERE