Premium bonds win

Haddenham35

Hi all,

My 5 month old son was fortunate enough to win a decent sum on the premium bonds recently and we'd like to use the winnings to invest for the longer term. Our plan is to split the winnings across our two sons and max out their junior isas each year (until we reach the sum of money won).

My questions are about the investment of the remaining money whilst we wait for each tax year.

If I invest it in one of my accounts, will it taxable at my normal tax rate?

If the savings appreciate in value through interest, would we have to pay tax or capital gains?

Or can I invest it in their names to keep it completely separate from our own savings pots?

any steer on how to get the most for our boys would be really appreciated.

thanks in advance!

BikingBud

Why are you splitting and sharing the money belonging to one of your sons?

redpete

If you put the money in an account in your name it will be yours and taxed at the appropriate rate for your savings (unless put into an ISA).

See the MSE article here that explains that interest on money given by the parents is taxed as if it were the parent's for everything above £200 per year. But that's for money given by the parent to the child, might be different where it can be shown as their own money from their PB winnings.

Keep_pedalling

Legally it all belongs to the child who held the bond, so should stay in their name only.

Haddenham35

https://forums.moneysavingexpert.com/discussion/comment/81917934#Comment_81917934

thanks for this - we have to put the winnings somewhere initially, but then can move to a savings account under their names. Would that avoid the tax as it's just temporarily moving through one of my accounts?

Thanks

Haddenham35

https://forums.moneysavingexpert.com/discussion/comment/81917932#Comment_81917932

When we purchased our two sons equal premium bonds, we made the agreement that any winnings would be split between them. Presume this question is a moral one vs a tax one?

Woodstok2000

The money belongs to your child, and while you manage it until they're 16, you have to manage it in their interest (and their interest alone). You cant give it away on their behalf, even to a sibling.

https://www.saga.co.uk/money-news/premium-bonds-for-children#:~:text=Shutterstock%20/%20vectorfusionart-,What%20happens%20if%20they%20win%20big?,it%20away%20to%20other%20children.%E2%80%9D

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81917948#Comment_81917948

You cant make that agreement on behalf of your son. Legally its his money. In reality, if you split the money, who's ever going to know apart from you, but the legal position is clear cut.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81917948#Comment_81917948

How did your 5 month old son indicate his consent to this "agreement"?

You are taking his money and giving it to someone else.

Haddenham35

https://forums.moneysavingexpert.com/discussion/comment/81917961#Comment_81917961

Tried to get his explicit consent but no dice yet.

what about if when he's say, 5, he gives explicit verbal and written consent?

p00hsticks

https://forums.moneysavingexpert.com/discussion/comment/81917962#Comment_81917962

I suspect he'd have to be at least a decade older than that before he would be considered as fully understanding the situation and so legally able to consent - possibly 18 but I'm not sure