Regular saver query

where_are_we

On a similar vein - recently my OH and myself have started to fund £300 a month to my daughter`s First Direct Current account in order to fund her continuing Regular Saver @7%. She has recently, with her partner, purchased her first house and had been running the FDRS herself but did not want to commit money (FDRS has no withdrawals) she now needs for setting up the house and was going to let it lapse. We are happy to gift this money (Birthday and Xmas now automatically sorted!) and it is out of our disposable income and so not liable for IHT.

ZeroSum

It'd only be an inheritance issue if your estate is worth over £1m, and both of you die in next 7 years. Even then, if you're allowed £3k gift allowance, it's each tax year, so if opened one now, then £2,400 would be in current tax year, and other half next year. Personally, should the worse happen, I couldnt see the authorities even querying a few hundred a month bank of mam & dad transactions for a 23 year old from parents who are balance sheet millionaires.
However, it does seem a bit of faff on for the sake of you effectively just gifting her £150, so just giver her the £150. Also the Lloyds account can be ran with a £25 a month minimum, so just do that & top up with higher amounts when affordable 

Money_Grabber13579

If she opens the account in her name, it sounds like she would be taxed in the interest? My understanding is that she has already got sufficient interest to use up the PSA but I might have misinterpreted that.

If that is the case though, and you wouldn’t pay tax on any interest, then if you can find a, say, 5% regular saver yourself, that would be the same (and much simpler) as using a 6.25% regular saver in your daughters name.

saajan_12

Yes you can legally loan her the money at 0% interest. Send a quick note saying you'll loan her £4800 over several payments and the whole sum should be repaid by x date. Simple, c doesn't need to be anything elaborate. No tax liabilities. What she does with it is her business; if she's earning interest above her allowance then she'll have to pay income tax on it. 

Do  remember the materiality though - over a year this is ~£120 after tax

soulsaver

where_are_we said:

On a similar vein - recently my OH and myself have started to fund £300 a month to my daughter`s First Direct Current account in order to fund her continuing Regular Saver @7%. She has recently, with her partner, purchased her first house and had been running the FDRS herself but did not want to commit money (FDRS has no withdrawals) she now needs for setting up the house and was going to let it lapse. We are happy to gift this money (Birthday and Xmas now automatically sorted!) and it is out of our disposable income and so not liable for IHT.

FTAOD: You can close the FDRS anytime to access the funds, but IIRC you lose the interest accrued.