Saving for my children

smiley-me

I'm currently getting divorced. My children (4 & 6) have money saved from birthdays, Christmases, inheritance, etc. to the tune of between £1500 & £2000 each, which is currently sitting in my cahoot savings account. I want to move the money now as it is *their* money & I don't want it to get absorbed by the divorce or to be counted at a later date when I need to prove my savings as *my* capital.

Where can I put the money so that I can add to it at subsequent birthdays etc. but not on a regular (monthly) basis? If it is opened in my name on their behalf (ie. they are named on the account), is it still considered as *my* capital? They already each have a Jump Investment Plan (Witan) which does get a monthly contribution - is it worth adding their savings to this plan? Is the money in this plan classed as *my* capital or theirs?

Any thoughts/advice most welcome.

Many thanks.

baby_boomer

It's a shame that the "paper trail" will show the Revenue that the money came from your account.

You can transfer the capital but £2,000 unfortunately = more than £100 pa gross interest so your oldest child could be liable for tax at your highest rate of tax. I'm afraid the current rules seem to work against children of single parents.

My advice would be to keep this money separate from future money which comes from outside sources eg grandparents / friends / godparents. And keep the paperwork to prove it.

In the meantime register both children for tax free savings by filling in a R85 form. This is legitimate if original money has come from sources other than yourself - be be aware that the Revenue may possibly ask you to prove this at some point. Or they may not

However you could presumably put the 4 year old's money into a Child Trust Fund (does he/she have one?) - where gifts from you are not liable for UK tax whatever interest they earn. This would remove any worries about potential tax entirely.

From memory I think the 6 year old is not eligible for a CTF.

Good luck with both this and your new life!

smiley-me wrote: »

They already each have a Jump Investment Plan (Witan) which does get a monthly contribution - is it worth adding their savings to this plan? Is the money in this plan classed as *my* capital or theirs?

Was this money set up as a "bare trust"? If so it is their capital which is their's to enjoy when they become 18. Witan would have offered setting up a bare trust for free when you took out the plan.

smiley-me

Thanks for your reply.

I don't pay tax right now, so will that change anything? Is it possible to get around the interest issue by me giving the money (in smaller amounts) to a few relatives who can then give the money back to my children in their own accounts? Or is this too naughty?!

Yes, my 4year old has a CTF but I was hoping to keep the money out of it as the money in there can't be touched until he's 18 & I'd like to keep his options open for now.

I have no idea if Witan set up the plan as a 'bare trust' - I must dig out the paperwork or give them a call to find out.

Thanks also for your good wishes.

baby_boomer

If you are a non-taxpayer then the Revenue won't be chasing you for interest of just over £100 in your children's accounts . So it makes things much simpler.

The same would apply to dividends from the Witan plan even if this wasn't a bare trust.

So - one less thing for you to worry about.

Sky_Digiman

By the way - you mean "our" children still They are still his/hers.