Transfer of money to children

beeepaaah

Hi

I have saved a little each month for each of my children and it has all been in one big pot. I keep a track of how much they have each month, and any premium bond wins get split between them and myself...it's all just in one pot.

However, I want to transfer each child's share to their own premium bond account now. For my daughter (who is now 21) this is £11,750 and for my son (who is 17) it is £10,437. However, I am confused as to how much can be transferred to them in any tax year via any given method. I don't want them to get stung for any inheritance tax or anything if the worst should happen...but am also confused by the different values which seem to be suggested for different methods.

Can anyone clarify how I (either alone or in conjunction with my wife also transferring some) can best move these funds into their ownership?

Many thanks!

Savvy_Sue

Is your estate likely to be liable to IHT? Hint: the answer is 'no,' unless your house and other assets are likely to be worth more than £1m. 

If it's yes, then is it likely - and I know we can never see the future - that either of you will die within the next seven years? Are either of you terminally ill / in very poor health / over 90, for example? 

It's possible you are worrying about nothing, or at least something quite unlikely. 

Keep_pedalling

Gifting never increases IHT it just takes 7 years for most of it to fall out of your estate. There are no tax issues for the at all.

RobfromCornwall

I would have thought both of your children (although really they're an adult and a very-nearly-adult) should be able to choose what to do with money you gift them.

Whilst you've clearly saved it with the intention of it being 'theirs', it is very much still 'yours'.  When you give it to them they should, in my view, be able to decide what to do with it.  This might involve buying Premium Bonds, saving in another account, buying a car, or whatever else they choose...

beeepaaah

RobfromCornwall said:

I would have thought both of your children (although really they're an adult and a very-nearly-adult) should be able to choose what to do with money you gift them.

Whilst you've clearly saved it with the intention of it being 'theirs', it is very much still 'yours'.  When you give it to them they should, in my view, be able to decide what to do with it.  This might involve buying Premium Bonds, saving in another account, buying a car, or whatever else they choose...

Thanks, although what they do with it isn’t what I was asking about…it’s what implications there may be for tax purposes. Both children have premium bonds accounts and are free to do what they want with the money, but in the meantime that’s where it will get transferred to until they decide.

400ixl

As stated, there is no immediate tax issue with giving them the lot in one go. For the next 7 years there is only a decreasing risk if you died and your estate (including that money) falls foul of IHT rules.

Likely you have nothing to concern yourself with from a tax perspective.

beeepaaah

Thanks all!! 🙏

Grumpy_chap

beeepaaah said:

it’s what implications there may be for tax purposes. 

There are none immediately.
There may be some if you die and have an Estate of sufficient value.
The sooner you gift the money the sooner the issue of potential tax at your death will be past.
Tax on some £11kor £12k for each of your children will be the least of their worries if you meet an untimely end.