Child Trust fund options

Bigwigg

Hi all, my daughter is just about to turn 18 and he CTF will end, we’ve got about £22 k in it and it’s to pay for her Uni accommodation for the 3 years, but not enough as yet for the three years. Weighing up the options for it, first thought is to ask her to close the account, transfer the money back to me, I’ll  put it in an ISA and carry on contributing and pay for her three years accommodation with it. Any obvious flaws with my plan ? She won’t refuse to pay it me back. Anybetter options I should be considering? Thanks for advice in advance 

wmb194

Bigwigg said:

Hi all, my daughter is just about to turn 18 and he CTF will end, we’ve got about £22 k in it and it’s to pay for her Uni accommodation for the 3 years, but not enough as yet for the three years. Weighing up the options for it, first thought is to ask her to close the account, transfer the money back to me, I’ll  put it in an ISA and carry on contributing and pay for her three years accommodation with it. Any obvious flaws with my plan ? She won’t refuse to pay it me back. Anybetter options I should be considering? Thanks for advice in advance 

Put it in an Isa in her name and you can still contribute towards it. If it's in an account in your name it's no longer her money.

xylophone

The money in the CTF belongs to your daughter absolutely and only she can deal with the account when she  reaches her 18th birthday.

There is no reason why she should not transfer those funds into an account in her own name (whether ISA or non ISA) and use the money as desired.

If she decides to use it to fund university costs but does not have enough to cover the full amount, you can simply continue to gift her money to add to the account as required?

daveyjp

The flaw is its her money.  If she gives it you there are potential tax implications.

Guide her in what she can do with it, incentivise her by offering to contribute if she doesn't spend it. However she is free to do with it as she pleases once she is 18.

Trynsave2

Imo using the money for its intended purpose is the worst thing she could do with it. I would encourage her to save it all at the best rate possible and take out the maximum loan possible to pay her rent. Whilst borrowing is never cheaper than no borrowing, student loan repayment rates are still right down there in comparison and if she never earns enough, she'll never have to pay any of it back. Better she leaves uni with student debt, but a nice lump sum in her back pocket for flat, car etc

Bigwigg

Trynsave2 said:

Imo using the money for its intended purpose is the worst thing she could do with it. I would encourage her to save it all at the best rate possible and take out the maximum loan possible to pay her rent. Whilst borrowing is never cheaper than no borrowing, student loan repayment rates are still right down there in comparison and if she never earns enough, she'll never have to pay any of it back. Better she leaves uni with student debt, but a nice lump sum in her back pocket for flat, car etc

I understand your point, but she will already be getting the maximum amount of maintenance loan, which £6 k a year to live on in London, it will not cover her accommodation and living costs.