Childrens account query

kitty1979

Hi Hoping someone will be able to point me in the right direction!

My child is due to receive a lump sum of money (25k)

I have spoken to the Halifax about putting into an isa but they've said as its over the £4260 limit the'd be taxed 20% of the £25k!

Does anyone have any ideas where I can put the money so that its locked away till they're 18 that doesn't involve losing the money to the taxman?

Thanks for your time!

Vortigern

No need to worry about tax. Your child has a personal allowance of £11,850, the starting rate for savings (taxed at 0%) covers the next £5,000 and the personal savings allowance of £1,000.

Your child could earn £17,850 per annum in interest and pay no tax.

The Halifax is right in saying there is a limit on how much you can add to a JISA each year, but no tax would be deducted from any account.

Any account placed in bare trust for a child would be locked away till the child is 18.

Is the gift of 25K from the child's parent? If so, beware that interest over £100pa would be taxable as the parent's income.

How old is the child? There may be better options than bank accounts for younger children.

xylophone

What is the source of the funds?

How old is the child?

Does the child already have CTF/JISA?

louloubelle79

Open a JISA and a S@S JISA.?

ValiantSon

Tax is only liable on the interest earned from any savings (and has been explained they'd have to get an unfeasibly high interest rate to pay any tax) not on the capital. If Halifax told you that they would have to pay 20% tax on £25,000 then they were incredibly wrong.

Alexland

louloubelle79 wrote: »

Open a JISA and a S@S JISA.?

Even with both types of JISA the total contributions cannot exceed £4,260 in the current tax year so it wouldn't help the OP stash more away.

https://www.gov.uk/junior-individual-savings-accounts/add-money-to-an-account

kitty1979

Thank you for all the replies! Yes what the Halifax said really didnt seem right!

The child is 10 and has a ctf which stops us opening up an isa.

The money is a pension benefit from a deceased parent?

MallyGirl

you can transfer the CTF into a JISA and then continue to contribute

kitty1979

Thank you, would we be able to transfer the full £25k or just the £4260?

xylophone

With regard to CTF/JISA transfer

https://www.skintedmintedmum.co.uk/minted-blog/how-to-transfer-a-child-trust-fund-ctf-to-jisa-with-a-double-scoop-of-tax-allowance.html

Thus it would be possible to get over £8000 into the new JISA.

For the balance, you hold it in bare trust for the child and gradually transfer into the JISA over the next four or five tax years.

The Nationwide Smart Limited Access might do for this purpose.

https://www.nationwide.co.uk/products/savings/smart-limited-access/features-and-benefits

http://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

kitty1979

great thank you i'll have a look!