Using my bank account to open S&S ISAs for sons?

uss_tish

I have recently retired and I want to gift my sons some money from the lump sum and we thought a S&S ISA account for each would suit them for longer term saving but my question is, will my bank/investment provider/HMRC think it is ‘suspicious’ that two ISA accounts were opened at the same time using the same bank account? I should add that I have also just opened one for myself and used my annual ISA allowance. 

Apologies if really silly/naive question not sure if this could be viewed as some sort of tax dodge or money laundering. 

blue.peter

I'm assuming that, since you're retired, your sons are adults. The situation might be a bit different if they aren't - I don't recall the rules in that situation, and haven't checked.

The general position is that third parties cannot pay into an ISA. You should expect the ISA manager to reject payments from anyone other than the ISA owners - your sons in this case. They will, in any case, have to complete and sign the applications. You cannot do this on their behalf except in certain very limited circumstances.

AskAsk

they will only accept money from the account belonging to the person who opened the ISA so you will need to give the money to your sons first and they open the ISA themselves.

grumiofoundation

Would be interested to know where the previous 2 posters are basing that on.

AFAIK there is no hard and fast rule against third party payments into ISAs. 

From gov link: https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors
Cash subscriptions from third parties can be accepted without question unless the ISA manager holds information that shows that the cash does not belong to the investor.

Although I don't know if all providers accept payments.
Maybe some providers may interpret differently and have their own restrictions? 



For example from fidelity:

As a third party, you are allowed to contribute to an ISA for someone else. Using our online application, you will have the option to provide your payment details once the account holder has given consent.

https://www.fidelity.co.uk/stocks-and-shares-isa-faq/#2437224
https://help.fidelity.co.uk/site/dealing-and-managing-cash/accepting-third-party-payments

uss_tish

Thanks for replies, yes sons are young adults (students). Looking at T&Cs for Vanguard it just says from a UK bank account doesn’t specify it has to be your own as far I can see. 

I can transfer to their own bank accounts but was tying to avoid the faff of transferring into and out of student accounts.

Application is wholly online and background checks are based on NI etc so no physical application or signature required as far as know.

eskbanker

uss_tish said:

Thanks for replies, yes sons are young adults (students). Looking at T&Cs for Vanguard it just says from a UK bank account doesn’t specify it has to be your own as far I can see. 

I can transfer to their own bank accounts but was tying to avoid the faff of transferring into and out of student accounts.

Application is wholly online and background checks are based on NI etc so no physical application or signature required as far as know.

Surely it's much easier for you to make simple faster payments to your sons than to open and fund S&S ISAs in their names?

jimjames

eskbanker said:

uss_tish said:

Thanks for replies, yes sons are young adults (students). Looking at T&Cs for Vanguard it just says from a UK bank account doesn’t specify it has to be your own as far I can see. 

I can transfer to their own bank accounts but was tying to avoid the faff of transferring into and out of student accounts.

Application is wholly online and background checks are based on NI etc so no physical application or signature required as far as know.

Surely it's much easier for you to make simple faster payments to your sons than to open and fund S&S ISAs in their names?

Unless it's meant to be a secret/surprise or they may want to use the cash for something else?

eskbanker

jimjames said:

eskbanker said:

uss_tish said:

Thanks for replies, yes sons are young adults (students). Looking at T&Cs for Vanguard it just says from a UK bank account doesn’t specify it has to be your own as far I can see. 

I can transfer to their own bank accounts but was tying to avoid the faff of transferring into and out of student accounts.

Application is wholly online and background checks are based on NI etc so no physical application or signature required as far as know.

Surely it's much easier for you to make simple faster payments to your sons than to open and fund S&S ISAs in their names?

Unless it's meant to be a secret/surprise or they may want to use the cash for something else?

Maybe, but it would be a daft idea to open and/or fund ISAs for other adults without their knowledge, given the possibility of falling foul of HMRC rules by doing so, i.e. if the named account holder inadvertently ended up with an invalid combination of ISAs or oversubscribed ones, by virtue of two people acting independently from each other!

uss_tish

It’s with their knowledge and what they’d both prefer rather than premium bonds or  lifetime ISA etc. consensus seems to be to transfer to their student accounts and take it from there. 

AskAsk

it will be simpler to give them the money and they make the payment as they will want to verify ID and they may also ask to see the bank statements, then it becomes complicated if you send in your bank statements and the account is not in your name.

someone had posted about the halifax share dealing account being restricted until they send in proof of their bank account.  the provider may accept the money but they won't cough back out until they see proof of the account ID so best do it the straightforward way.

as well as ISA regulations, there will be money laundering regulations that the service provider will need to follow so even though someone had pointed out that the t&c of some providers state they accept funds from anyone's bank account, they may not be so forthcoming when it comes to paying the money back!

eskbanker

uss_tish said:

It’s with their knowledge and what they’d both prefer rather than premium bonds or  lifetime ISA etc. consensus seems to be to transfer to their student accounts and take it from there. 

If they're adults then it's obviously up to them what they do with their money, but (admittedly without visibility of the full circumstances) personally I'd have thought that it would make more sense to divert up to £4K into lifetime ISAs, with the rest into S&S ones, rather than putting the lot into the latter - why turn down a 25% bonus?