Transferring Children's Savings 24 October 2022 at 11:59AM in Savings & investments 9 replies 291 views

sinjorum

Hi all,

I want to transfer my children's savings from their existing account to a new one with a differnt provider, which has a higher rate.  The easiest way to do this is to withdraw the money to my own account and then transfer it from there to their new accounts.  However, will this then be classed as a new 'gift' from me, meaning tax would then need to be paid on their savings?  - Do I need to find a way to transfer direct from their old account to the new one to avoid this?

Any advice greatly appreciated!

xylophone

Presumably these are accounts that are not JISA/CTF accounts.

Is it possible to open accounts for the children with the new provider then have the old provider transfer the cash from the children's accounts through normal banking channels?

sinjorum

Thanks for your reply.

No not JISA/CTF.  The only way I can transfer it online is to transfer into my account first and when I contacted my bank, they said this was the only method at all, hence my question about whether we would get stung with tax through doing that.  However, I'm going to check with them again tomorrow - as the more I think about it, the more this doesn't feel right - as you say, they must be able to transfer it direct, surely.

ForumUser7

sinjorum said:

Thanks for your reply.

No not JISA/CTF.  The only way I can transfer it online is to transfer into my account first and when I contacted my bank, they said this was the only method at all, hence my question about whether we would get stung with tax through doing that.  However, I'm going to check with them again tomorrow - as the more I think about it, the more this doesn't feel right - as you say, they must be able to transfer it direct, surely.

Are you able to tell us the account name and provider you are trying to transfer from and to please? I’d like to try and help but am not really sure without that information.

kaMelo

There is no tax due simply by gifting a child money. However if the interest received on money gifted to a child from their parent/guardian exceeds £100 (£200 if both parents/guardians gifted money) per year, the entire interest received would be counted against the parent(s) personal savings allowance and taxable if this means you go over your personal savings allowance. If it's all gifted money the tax position is the same whether directly transferred or transferred via your account.

it depends upon the amounts but it may be worthwhile working out whether this will have any impact upon you prior to transferring and if so, consider a JISA for some of it.

MX5huggy

There’s no tax on gifts. Theoretically you could generate a IHT liability if you or your child die within 7 years, but firstly is IHT even an issue for either secondly is the value involved even going to be noticed if there was a death. Just move the money via your account if that is easier. 

Daliah

How old are your children? Can you set up current accounts in their names and channel their money through these? https://www.which.co.uk/money/banking/bank-accounts/best-childrens-bank-accounts-arspc9p7mk0y

wmb194

sinjorum said:

Hi all,

I want to transfer my children's savings from their existing account to a new one with a differnt provider, which has a higher rate.  The easiest way to do this is to withdraw the money to my own account and then transfer it from there to their new accounts.  However, will this then be classed as a new 'gift' from me, meaning tax would then need to be paid on their savings?  - Do I need to find a way to transfer direct from their old account to the new one to avoid this?

Any advice greatly appreciated!

Don't worry about it. I cannot find it now but I read somewhere that HMRC accepts this this sometimes has to happen and is okay with child a/c 1 - trustee a/c - child a/c 2 transfers. The chances that HMRC will ask any questions are absolutely minimal anyway and you'll have statements with dates to show what you did and why.

A way I've done it in the past has been in cash but banks can be funny about cash withdrawals and deposits these days.

xylophone

The only way I can transfer it online is to transfer into my account first and when I contacted my bank, they said this was the only method at all, 

If this is the case, then it is what you will need to do.

If there ever were a query, then you would have an "audit trail" via your account to show that the money belonged to the child and was returned to the child via the bank transfers that you undertook.

On a general point, I take it that your concern arises from the fact that you/your spouse were not the original donor of the funds in the accounts?

If you were, then from the point of view of interest and tax, the position remains the same.

If the interest was taxable on you/your spouse in the old account

 (see  https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4310)

then it remains the case in the new account.

sinjorum

Thank you very much everyone for your replies.  The money was originally provided by grandparents.  I think I will just transfer it via my account, ensure a trail