Saving for a group holiday

snifferc

Hi there. I have a grand plan to go to the British Lions Tour to New Zealand. The bad news is this is going to be expensive! The good news is we have 10 years to save. So, there is likely to be a group of individuals interested and I thought rather than all save individually, I could set up a new savings account into which individuals pay each month - £100 per month, £12k each over 10 years. However, what are the tax implications if any of such a groups saving scheme. Anyone got any experience of this and any tips for me please? Thanks

bowlhead99

Top tip would be, don't try it. Going into business with, or sharing finances, with friends is one thing people are always told NOT to do. One or two trusted friends / confidantes? It could work. Ten people over a decade? No chance.

For a start, the interest rate you can achieve on a personal account, joint account or trustee account for £6k, 12k, £50k, £144k plus interest... is much worse than an individual can get for themselves in the very best accounts they could find for themselves, and someone in a group of ten will always feel uneasy about one person looking after a treasure trove of £50k of all your money six years before it is even needed for the holiday.

A declaration that you are only holding the money on behalf of others and that the interest is not yours alone may work for HMRC, but banks don't recognise trust and nominee arrangements on personal accounts so will not report it to HMRC as being anything other than your account, and for anti-money laundering reasons are unlikely to want someone to bank £140k of money that mostly belongs to nine other people who aren't actually their customer. So you would need to get a partnership or trust account - which are a hassle to set up (aside from needing a binding partnership or trust deed) and they only pay paltry interest rates.

If you all trust each other enough for one person to hold a hundred grand of other people's money, perhaps you should trust each other all to do their own savings.

gingercordial

Don't even try. People's circumstances can change a lot in 10 years - almost certainly at least one of you will fall out with the others, or move countries, or have a child/caring obligation they can't leave, or need the money to buy a house/pay debts, or lose interest in sport, or divorce and have to pay out half their savings, or die... And in the meantime they would have to trust you an awful lot, and you would be under a lot of pressure to account for this.

Fingers crossed that at least a few of you can go!

Malthusian

There's only two replies so far so it hasn't been said often enough - do not do it. Do not touch their money with a bargepole. Save for your own tickets and let the rest do what they want.

snifferc wrote: »

However, what are the tax implications if any of such a groups saving scheme.

The most sensible arrangement would be bare trusts so there would be no tax implications; the money would remain taxable as their own and you would need to forward them all details for their tax returns.

More importantly, as trustee you would be obliged to invest their money as a prudent person of business would. As the tour is 10 years away, dumping it in cash for ten years is unsuitable and you would be liable for the group's losses if you did so. Travel costs and ticket prices will increase with inflation over the next 10 years.

Robin9

I'll be the 4th - don't do it.

In a group circumstances will change - move away, die ……….

Just do it as an informal group individually and meet in the pub after a match