child savings

treasurer23

I have been lucky to be in the position where I have saved my son's child benefit (Scotland) since he was born, along with cash gifts from family for Xmas and birthdays; the total is currently sitting at around £20k. The money is in a TSB child savings account earning next to nothing in interest so I'm looking to move this into an account where he can benefit from better interest rates. He is 11 years old with additional support needs and no idea about this account.

I currently oversee the account however he takes control once he reaches 16 years old which is not a situation I want him to be in. I've scoured the internet and now am totally confused with what our options are:

• JISA - I've read these have poor interest rates and can only save one £9k sum in total - is that correct?
• Child savings account - is it best to save here and move about according to interest rates? How much money can be saved until it is taxed?
• Stocks and shares - I'm not willing to take any gambles with his money

Ideally it would be placed in an account where I retain control and support him to use the money for the big things in life such as a first car/deposit for house etc. 

Thanks everyone in advance 

Bigwheels1111

There are 100 plus posts on this subject on here it might be quicker searching for them.

Kids isa's are 9k a year from memory but don't quote me.

I tried to search for you and the results are not very good.

Here is one.

https://forums.moneysavingexpert.com/discussion/comment/80958555#Comment_80958555

treasurer23

Bigwheels1111 said:

There are 100 plus posts on this subject on here it might be quicker searching for them.

Kids isa's are 9k a year from memory but don't quote me.

I tried to search for you and the results are not very good.

Here is one.

https://forums.moneysavingexpert.com/discussion/comment/80958555#Comment_80958555

Thanks for the search - I did do this prior to considering making my own post; like you, my results weren't great hence this post.
From what I have read and understand online, kids can only have 1 JISA and 1 stocks and shares ISA at any one time to the total of £9k, unlike adults who can open one every tax year. If I do open one of them for him, I still need to consider what to do with the remaining £11k+. Additionally, they automatically transfer to the ownership of my son when he reaches 18 and he really won't be in a position where it is safe for him to have that amount of money.

gravel_2

You are quite mixed up. Adults can open any number of ISAs - the only limitation is max total 20k new money added to ISAs in a tax year.

A child can have two ISAs - one cash and one stocks and shares. The maximum that can be contributed is 9k per tax year until maturity.

gravel_2

treasurer23 said:

Bigwheels1111 said:

There are 100 plus posts on this subject on here it might be quicker searching for them.

Kids isa's are 9k a year from memory but don't quote me.

I tried to search for you and the results are not very good.

Here is one.

https://forums.moneysavingexpert.com/discussion/comment/80958555#Comment_80958555

Additionally, they automatically transfer to the ownership of my son when he reaches 18 and he really won't be in a position where it is safe for him to have that amount of money.

Is this not likely to happen with your current approach? Looking at TSB Young Saver (3.2%) it seems parent has control until 16 and then it's in the child's control.

Also be aware that interest earned in child accounts can create a tax liability for the parent.

treasurer23

gravel_2 said:

You are quite mixed up. Adults can open any number of ISAs - the only limitation is max total 20k new money added to ISAs in a tax year.

A child can have two ISAs - one cash and one stocks and shares. The maximum that can be contributed is 9k per tax year until maturity.

many thanks - I knew about the adult ISAs but good to know that the rules applying to children mirror this (albeit not as much). This certainly wasn't my understanding when trawling through the internet so glad to have that clarified 

400ixl

With a JISA, you open one and then you can contribute up to £9k each year. So in the second year you can add another £9k into that same ISA. So you could add £9k now and £9k in April 25 etc.

Stocks and Shares JISA could well be worth considering if the investment period is long enough. If the idea for example is that they would remain invested for 10 years then that is a period that could well be worth it. Especially as the JISA converts to an ISA at 18 keeping the tax wrapper in place.

treasurer23

gravel_2 said:

treasurer23 said:

Bigwheels1111 said:

There are 100 plus posts on this subject on here it might be quicker searching for them.

Kids isa's are 9k a year from memory but don't quote me.

I tried to search for you and the results are not very good.

Here is one.

https://forums.moneysavingexpert.com/discussion/comment/80958555#Comment_80958555

Additionally, they automatically transfer to the ownership of my son when he reaches 18 and he really won't be in a position where it is safe for him to have that amount of money.

Is this not likely to happen with your current approach? Looking at TSB Young Saver (3.2%) it seems parent has control until 16 and then it's in the child's control.

Also be aware that interest earned in child accounts can create a tax liability for the parent.

absolutely - another reason my my plea for advice!

with respect to you comment about child accounts, can you explain why I would pay tax on his savings if the account is in his name (if that's what you meant!)

gravel_2

treasurer23 said:

gravel_2 said:

treasurer23 said:

Bigwheels1111 said:

There are 100 plus posts on this subject on here it might be quicker searching for them.

Kids isa's are 9k a year from memory but don't quote me.

I tried to search for you and the results are not very good.

Here is one.

https://forums.moneysavingexpert.com/discussion/comment/80958555#Comment_80958555

Additionally, they automatically transfer to the ownership of my son when he reaches 18 and he really won't be in a position where it is safe for him to have that amount of money.

Is this not likely to happen with your current approach? Looking at TSB Young Saver (3.2%) it seems parent has control until 16 and then it's in the child's control.

Also be aware that interest earned in child accounts can create a tax liability for the parent.

absolutely - another reason my my plea for advice!

with respect to you comment about child accounts, can you explain why I would pay tax on his savings if the account is in his name (if that's what you meant!)

It's just the rules. If money in the child's account given to them by a parent earns more than £100 in interest then every penny above that counts against the parent's personal savings allowance: https://www.gov.uk/savings-for-children

This does not apply to JISAs.

treasurer23

400ixl said:

With a JISA, you open one and then you can contribute up to £9k each year. So in the second year you can add another £9k into that same ISA. So you could add £9k now and £9k in April 25 etc.

Stocks and Shares JISA could well be worth considering if the investment period is long enough. If the idea for example is that they would remain invested for 10 years then that is a period that could well be worth it. Especially as the JISA converts to an ISA at 18 keeping the tax wrapper in place.

great - thanks for being so clear. With respect to the control aspect, do you have any opinion on what would be the best approach to safeguard his money from people who may take advantage of him and also protect it from any taxation as a result of my earnings?

gravel_2

You are probably not looking at enough money for it to be economical for you to look at options like trusts - such products could enable you to restrict/postpone access to a later age.

If your primary concern is preventing access at 16 or 18 then your best option may be to save in your own name and then decide when and how son receives the money. This obviously means the money is fully in your name and potentially you are on the hook for tax (depends on your own financial position, of course). It also means your son will not have the (potential) benefit of having a chunky ISA in his name that is safe from income tax.