Kids savings for £10,000+

hjabc123

Hi,
I was wondering if somebody could help me please. We have some savings for my daughter and I want to make sure we maximise the amount we are getting out of the accounts. We currently have 2 accounts, both with Halifax. One is the Kids Monthly Saver, which currently provides 4.5% AER and the other is a Kids Saver, which we have just had notice this morning is changing to 0.01% AER on amounts over £5,000 from mid-July this year. We are happy enough with the Kids Monthly Saver, we put in £100 per month and this accrues over the year and then gets deposited into the Kids Saver account. We then start over again at 0 for the new year. By the time July comes, we will have approximately £12,000 in the Kids Saver account which will be earning a tiny amount of interest. I am looking to transfer the funds in this account to a different account that earns more interest. What are the best options please? Is there a higher earning account we can use that doesn't end up transferring over into the child's name when they reach 16 or 18? We don't know if we want her to have access to the money at this age, as the money is for a house deposit or something similar.

Other things that might be relevant:
My daughter is 6 years old. 
We have no need to withdraw any money from the larger savings account

Thanks for any assistance. I find all this stuff really difficult to understand and work out what the best option is.

colsten

I would say JISA: https://moneyfacts.co.uk/isa/junior-isas/. I think the annual allowance is now £9K?
Lots of choice for any surplus: https://moneyfacts.co.uk/savings-accounts/childrens-savings-accounts/

[Deleted User]

I’d put £9000 in the NS&I Junior ISA, and the rest in the HSBC MySavings account to transfer next tax year.

Anonymous101

I'd be investing the money rather than saving it.
I invest in a simple low cost index fund within my son's JISA. Personally I wouldn't even think about saving in a cash account for him, it'll will be worth substantially less by the time he's old enough to use it. 

bowlhead99

hjabc123 said:

Is there a higher earning account we can use that doesn't end up transferring over into the child's name when they reach 16 or 18? We don't know if we want her to have access to the money at this age, as the money is for a house deposit or something similar.

Other things that might be relevant:
My daughter is 6 years old. 
We have no need to withdraw any money from the larger savings account

If it is your daughter's money, in an account in her name, you can't stop her having it at 18 because it's hers. To maintain control beyond 18 you would need to save/invest in your own names. Unfortunately adult savings don't attract the nicer interest rates that are offered to kids.

What you could do is split the money so that over the next couple of tax years you move your daughter's existing money and this year's savings into a junior ISA (accessible by her when she is 18, but hopefully she will respect your wishes on the sort of things you would like her to do with the money, especially if there is a carrot of future money coming to her later) and then put future money into you and your partner's own accounts (ISA, pension or just plain unwrapped accounts) so that you can gift that part of the money to her when you see fit, which might not be as early as 18.

With the timescale involved (more than a decade until she's 18 and perhaps two decades before she would need a property deposit) you should recognise that cash savings may struggle to keep up with inflation over the long term and so it's likely that some or all the money accumulated so far would be better in an S&S JISA (invested in investment funds) rather than as cash deposits, for better growth in real terms.

xylophone

The money in accounts in your daughter's name is already hers - you are a bare trustee - she has the right to access and control at age 18 (16 in Scotland).

Incidentally, where a parent  deposits capital  in a non tax privileged account in the name of his unmarried minor child and that capital earns interest over £100 per annum, while both the capital and the interest belong to the child, it is taxable on the parent.
https://www.gov.uk/savings-for-children
Perhaps you might consider opening a JISA for your child and transferring in £9000 for the current tax year.
The balance could be deposited in the best paying child account you can find and then transferred to JISA next tax year. https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

Gifts from other people to the child can be saved in either account.

You might then stop saving into an account in your child's name but use your own ISA allowance to invest the cash in stocks and shares for the next however many years to be given at a time of your choice.

Anonymous101

xylophone said:

The money in accounts in your daughter's name is already hers - you are a bare trustee - she has the right to access and control at age 18 (16 in Scotland).

Gifts from other people to the child can be saved in either account.

You might then stop saving into an account in your child's name but use your own ISA allowance to invest the cash in stocks and shares for the next however many years to be given at a time of your choice.

This is pretty much my approach. We invest any gifts our child receives on their behalf. They're too young to spend the money for themselves at the moment but we'll encourage them to invest half of any gifts once they are old enough to decide for themselves. We don't put any money a side separately instead choosing to fill our own Pensions and ISA's. Chances are they will get the money eventually either through us paying for University or gifting house deposits etc or ultimately inheritance. However I'd rather retain control as to when that happens if possible. In my opinion 18 is often too young to hand over control of what could be significant sums of money.

eskbanker

Anonymous101 said:
We invest any gifts our child receives on their behalf. [...] We don't put any money a side separately instead choosing to fill our own Pensions and ISA's. Chances are they will get the money eventually either through us paying for University or gifting house deposits etc or ultimately inheritance.

Seems a pretty extreme interpretation!  Taken at face value, you're effectively keeping the money for yourselves and if some happens to be left for the kids when you pop off then they'll get access to their own money when they probably don't have any need for it.  Are the donors aware that you're stashing their gifts away somewhere as inaccessible as your pensions?

Edit: my misunderstanding, clarified below....

xylophone

 Taken at face value, you're effectively keeping the money for yourselves and if some happens to be left for the kids when you pop off then they'll get access to their own money when they probably don't have any need for it.  Are the donors aware that you're stashing their gifts away somewhere as inaccessible as your pensions?

Have you misunderstood? Anon says above

I invest in a simple low cost index fund within my son's JISA. 

This is where gifts from other people to to the child go?

He just doesn't give money to the child himself but may do in due course (at a time of his choosing) from his own ISA etc.

eskbanker

xylophone said:

 Taken at face value, you're effectively keeping the money for yourselves and if some happens to be left for the kids when you pop off then they'll get access to their own money when they probably don't have any need for it.  Are the donors aware that you're stashing their gifts away somewhere as inaccessible as your pensions?

Have you misunderstood? Anon says above

I invest in a simple low cost index fund within my son's JISA. 

This is where gifts from other people to to the child go?

He just doesn't give money to the child himself but may do in due course (at a time of his choosing) from his own ISA etc.

It's entirely possible that I've misunderstood, but the post I quoted clearly (to me) suggests putting at least some gifted money into Anon's own accounts (in the context of your suggestion to do so) rather than the JISA mentioned in the earlier post.  I don't have an issue with the principle but it would seem reasonable to do so in a transparent way involving ring-fencing such money and having it somewhat more accessible than being in the adults' pensions, although to be fair I have no idea how old Anon will be when the child turns 18/21....

Edit: yes, I did misunderstand, apologies!

Anonymous101

eskbanker said:

xylophone said:

 Taken at face value, you're effectively keeping the money for yourselves and if some happens to be left for the kids when you pop off then they'll get access to their own money when they probably don't have any need for it.  Are the donors aware that you're stashing their gifts away somewhere as inaccessible as your pensions?

Have you misunderstood? Anon says above

I invest in a simple low cost index fund within my son's JISA. 

This is where gifts from other people to to the child go?

He just doesn't give money to the child himself but may do in due course (at a time of his choosing) from his own ISA etc.

It's entirely possible that I've misunderstood, but the post I quoted clearly (to me) suggests putting at least some gifted money into Anon's own accounts (in the context of your suggestion to do so) rather than the JISA mentioned in the earlier post.  I don't have an issue with the principle but it would seem reasonable to do so in a transparent way involving ring-fencing such money and having it somewhat more accessible than being in the adults' pensions, although to be fair I have no idea how old Anon will be when the child turns 18/21....

Sorry yes it wasn’t entirely clear looking back with it being over two posts, and I did say separately.

To clarify, any money gifted to him goes into his JISA. We then consciously chose not to invest monthly into his account and instead maintain control of that money in order that we can decide where that is spent.