Can I pay into my adult children's ISA directly

princesspink

My husband and I are "comfortable" in financial terms. I would like to help my children more. I thought i could pay directly into a S&S ISA, say £100, 2 children, £2400 a year, well below the current IHT gift allowance.

My question is, is this allowed, or do i need to set up a standing order to their current accounts and then get them to set up a standing order to their S&S ISA account.

I found try to read the guidelines completely confusing and slightly contradictive!

TIA

friolento

It depends on the T&Cs of the ISA. Some allow deposits from third parties, others say they only take deposits from the account holder.

GrubbyGirl_2

I could be completely wrong but I always thought that you could only pay in and out from the linked account

Keep_pedalling

I don’t think there are many ISA providers who allow third parties to pay into an adult ISA, Why are you thinking of an ISA rather than just gifting the money for them to choose what to do with it?

There is no such thing as an IHT gift allowance, the £3000 (£6000 for a couple) is simply an exemption you can gift as much as you like without any penalty, it’s just that anything over that exemption falls within the 7 year rule for IHT purposes and even then if your joint net worth is under £1M this does not come in to play.

If it would be useful to take full advantage of your annual exemptions to reduce your IHT liability, gift the full £6000 now and do the same next year. If none of your exemptions were used the last financial year you can carry that over and make a joint gift of £12,000 this year.

born_again

Do they have any ISA's of their own where you paying into one is going to affect the allowance.

Albermarle

£2400 a year, well below the current IHT gift allowance.

In the UK there is no tax on gifts.

Assuming your estate will be large enough to attract IHT, you could still give your children £100K ( for example) . If you live 7 years that £100K would be out of your estate. If you do not live 7 years, the £100K will be counted back into your estate, so you are just back at square one- you have not incurred any extra IHT.

surreysaver

https://forums.moneysavingexpert.com/discussion/comment/82145610#Comment_82145610

Only a few providers have the concept of a linked account. Most will accept money from any account

Gsaver1

I'm after some clarity. I always thought the personal allowance of £3000 was the most you could give in one year that would not affect an estate. I have heard this can be £4000, this information was from a solicitor……..

jimjames

https://forums.moneysavingexpert.com/discussion/comment/82145993#Comment_82145993

As above there is no limit on gifts. The £3000 is the annual amount where IHT is out of scope. If you live more than 7 years from a gift then any amount can be given,

masonic

https://forums.moneysavingexpert.com/discussion/comment/82145993#Comment_82145993

It's a rather complex situation. There are various classes of gifts that can be disregarded for IHT, including gifts out of excess income, but there are steps that need to be taken for that.

IHT is not the only thing to consider, deprivation of income may also be relevant depending on your health and personal circumstances.

Perhaps a topic for a new thread.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82145993#Comment_82145993

There is never any downside to gifting as far as IHT is concerned. You can gift as much as you like but should you exceed the your annual exemption and die within 7 years the non exempt part of your gifts are brought back into your estate for IHT purposes.

The worst that can happen therefore is your estate pays the same amount of IHT as it would have done if you had not made those non exempt gifts which are known as potential exempt transfers (PETs).

If you are making large PETs you can cover the 7 years IHT potential liability by taking out 7 year term insurance.