Income for University student.

Nick_Sellick

Hi,
We are hoping to be able to help one of our children while they are at uni.
If we are able to place a lump sum into an account for them to have the interest, what would be the best way to do it?
We are low rate tax payers and presumably would pay tax on any interest on accounts in our name.
As a student, I gather our son wouldn’t if the account were in their name.
Does any of that make sense? 

xylophone

There is nothing to prevent your gifting a  lump sum for maintenance to an account in the name of your student son.

If you feel that such a sum would present too great a temptation, why not simply remit a certain amount  every month to help cover his expenses?

Or pay his accommodation fees from your own account?

Nikkster

He would still need to pay income tax if his taxable income exceeded his tax allowance

eskbanker

Nick_Sellick said:

We are hoping to be able to help one of our children while they are at uni.
If we are able to place a lump sum into an account for them to have the interest, what would be the best way to do it?
We are low rate tax payers and presumably would pay tax on any interest on accounts in our name.
As a student, I gather our son wouldn’t if the account were in their name.
Does any of that make sense? 

Just to add to earlier answers, putting the money in an ISA (whether in your name or his) avoids taxation, but focusing unduly on tax potentially payable on interest seems likely to be unnecessary, or is it a huge lump sum that you're talking about?

400ixl

Will your son be getting the maintenance grant?

What we have done for our daughter is that we pay for her accommodation and she uses the grant for living costs.

Either way you gift them the money and let them use it as they need to.

cloud_dog

Nick_Sellick said:

Hi,
We are hoping to be able to help one of our children while they are at uni.
If we are able to place a lump sum into an account for them to have the interest, what would be the best way to do it?
We are low rate tax payers and presumably would pay tax on any interest on accounts in our name.
As a student, I gather our son wouldn’t if the account were in their name.
Does any of that make sense? 

I suppose my question is, why the focus on getting the interest to the child from the lump sum?

I mean I get it, it is additional free money for the child but, does that really matter, to them especially?

The reality is that free money is free money for them.  We simply paid them an initial lump sum (start up / get going costs) and then a simple monthly allowance.

Johnjdc

Nick_Sellick said:

Hi,
We are hoping to be able to help one of our children while they are at uni.
If we are able to place a lump sum into an account for them to have the interest, what would be the best way to do it?
We are low rate tax payers and presumably would pay tax on any interest on accounts in our name.
As a student, I gather our son wouldn’t if the account were in their name.
Does any of that make sense? 

You can put it in his name - but it will then be his money. If he wants to withdraw it all and go on an epic Freshers' Week bender, he can.

Albermarle

400ixl said:

Will your son be getting the maintenance grant?

What we have done for our daughter is that we pay for her accommodation and she uses the grant for living costs.

Either way you gift them the money and let them use it as they need to.

Or you can pay for the accommodation directly, or transfer the appropriate amount each month to their account, so they can pay the rent.

Nick_Sellick

All  really useful answers, thank you.