Savings for children

Abu_Haneefa

Hi,

I currently work and every month once my salary is paid i put away £500 every month for my daughter, however as my daughter is only 5 years old, the money is in another one of my accounts.

Are there an tax issues i need to know if and when I give her the money when she is older?

eskbanker

The short answer to your question is no, there aren't any tax issues involved in gifting a substantial sum to your daughter in, say, 10-15 years time (unless you were both unfortunate enough for inheritance tax to be an issue within the seven years after that).

However, the longer answer is that you'd probably be better to consider investing it rather than saving it, in order to improve its chances of outperforming inflation over a fairly lengthy period. Better still, do so within a Junior ISA, which shelters all capital growth and dividend income from tax, albeit with an annual contribution limit of £4,260.

As things stand, the pot you're building up in your name counts as your asset, which can impact on means-tested benefits (if ever applicable) and also contributes to your own income and therefore taxation (if your savings generate enough interest to exceed the personal savings allowance).

AnotherJoe

Agreed, invest, dont "save" which at current rates will actually be losing to inflation.

xylophone

Does your daughter have a JISA?

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

https://www.moneywise.co.uk/investing/investing-children/the-best-stocks-and-shares-junior-isas

https://www.moneysavingexpert.com/savings/junior-isa/

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa?cmpgn=PS0517UKPABJI0001&gclid=EAIaIQobChMIhKu_-_HF4AIVzZ3tCh2IkwIMEAAYASAAEgJpt_D_BwE&gclsrc=aw.ds

https://monevator.com/vanguard-lifestrategy/

But remember - this is an outright gift to the child who has the absolute right to access at 18.

GreyName2

I think you should think about investing in blue chips since ten years will be enough so that you can not only accumulate but also increase your capital

londoninvestor

GreyName2 wrote: »

I think you should think about investing in blue chips since ten years will be enough so that you can not only accumulate but also increase your capital

A fund would be better than trying to pick individual "blue chips", especially for these amounts.