Lump Sum (£50k-100k) in child's name.

sirhan_sirhan

Hi,

Would appreciate some advice, as I seem to be geting nowhere on my own.

I am looking to invest betwen £50k and £100k, in my child's name, in order to pay for future school fees. Ideally I would be looking towards a 12 month bond (certainly nothing longer term than 18 months), giving me the option to reassess the rates in a year or so, and reinvest accordingly.

I am working my way through the best buy tables on moneysupermarket, but seem to be finding that most of the bonds are limited to persons over the ages of 18. When I find one that doesn’t have this stipulation, I usually send a mail to the relevant account provider, setting out my requirements, but most of the time this never gets a reply. I arranged an appt at Norwich & Peterborough last week, as they had an account that paid 6.7% (or thereabouts), but they contacted me before my appointment to tell me that the rate has been cut to 6.2%.

My current options therefore appear to be to go with this 6.2% (I am disinclined to do this as they messed me around with my appointment, then cut the rate), or open an account with Sainsbury or similar, paying 6.25%.

Can anyone see any options that I might have overlooked, or help me through this maze?

Any help would be greatly appreciated.

baby_boomer

I'm pretty sure the Revenue would assume that you, and not your child, was paying for school fees.

A gift of that size to your child would attract tax at your highest rate of income tax IMHO.

Forget which account - your plan is aiming to defraud the Revenue.

But I'm not a tax expert, and I'm happy to be proved wrong.

I suspect it would be different if the money had come from grandparents or another source than parents.

sirhan_sirhan

Many thanks for the response baby boomer.

I feel you are right, as I have been doing some research on this over the last 24 hours. It would appear that any gift from a parent to a child, that attracts interest of over £100 pa, will be taxed at the marginal rate of that parent.

Don't get me wrong though; I was not seeking to commit fraud, purely to become more tax efficient.

Thanks again.

Jonbvn

Have you had a look at specialist advisers for school fees planning? Here's one for example http://www.sfia.co.uk/experts.stm

I would also have a look at Index Linked savings certificates. http://www.nsandi.com/products/ilsc/index.jsp
They can be bought by anyone over 7 or over, or on behalf of anyone below 7 yrs old. They are completely tax-free.