ISAs for under 18s?

maccboy

Hi
Bit green, here, so be gentle with me!
My son, who is 16, has had a letter (from the Halifax) saying that he will start paying tax on his savings unles he changes accounts. We've looked around for an ISA for him, but they all seem to be 18+. Are there ISAs for 16 year-olds, or should I just be looking for a high-interest account? An online account would give a better return (I guess). He has over £1700 to invest. Can anyone please point me in the right direction?
Is it ture that online accounts always give a better return? My daughter (13) has a few hundred to invest too, you see!

Thanks.
maccboy

simmed

I'm 16, I was going to start paying tax on my savings too but as I'm not earning much I filled in an R85 form and I get tax free interest.

spalding

Does he work how much is he earning as the above poster says he should be able to fill out an R85 form

martinman3

Cash ISAs are available from the age of 16, just as an example since rate is poor http://www.ybs.co.uk/savings/taxfree/isa_plus/index.jsp
and Halifax only allow childrens accounts for savers up to 16 years.

However, so long as 16 year old earns less than personal allowance, as others have said, it may be better to have a high interest account and receive interest gross after filling in R85.

Crabman

You'll be able to get interest tax-free provided income is below these limits:

http://www.hmrc.gov.uk/rates/it.htm

(I've moved this to the ISAs sub-board )

schoolfundraiser

maccboy wrote: »

Hi
Bit green, here, so be gentle with me!
My son, who is 16, has had a letter (from the Halifax) saying that he will start paying tax on his savings unles he changes accounts. We've looked around for an ISA for him, but they all seem to be 18+. Are there ISAs for 16 year-olds, or should I just be looking for a high-interest account? An online account would give a better return (I guess). He has over £1700 to invest. Can anyone please point me in the right direction?
Is it ture that online accounts always give a better return? My daughter (13) has a few hundred to invest too, you see!

Thanks.
maccboy

We had the same letter and my daughter has nearly 10K in the account which she would have to close and to open a new regular savings account starting from scratch in order to get gross interest. So I'm afraid I said sod it and we withdrew the money with a letter to Halfax explaining why. I have just opened an Abbey Direct ISA for her (took some doing) at 6.25%. In theory ISAs are open to anyone who has a NI no but some banks and building socities are picky about who they want as savers.

So far Nationwide is happy to have 16 to 18 year old customers, as is Nottingham Building society the Derbyshire and Abbey. There may be more the best idea is to find a product and ring their head office to check.

Then the next snag is opening the account without a cheque book to write a cheque as most under 18s aren't allowed a cheque book on their account and banks don't issue counter cheques any more. I could go on about this for a long time but I won't as my blood pressure won't stand it. Needless to say you can do it but you need stamina.

I am not sure if they will let under 18s have online accounts. Haven't gone down that route due to security issues with such as laptops/passwords etc. Postal is best. however be prepared for your offspring to have to confirm their name address and birthdate and NI no over the phone ( the NI and tax offices need this too) before your child asks them to deal with you as you understand what they are talking about (well possibly anyway )

GOOD LUCK - it is possible but it ain't easy

schoolfundraiser

Oh and I forgot the proving ID difficulty - they will accept the letters from the tax office etc so the notification of NI no could be one document and you can use a bank or building society statement for the other. That saves the necessity of getting certified photocopies of such as birth certs and passports to post off. However check by phone first - and don't forget the more people who raise the issues the more chance they will be sorted out properly.

I don't think many under 18s have ISAs because they are not the immediate choice when gross tax is more or less automatic when they aren't working. However don't forget that they are always tax free even when your tax status changes and you can usually transfer the savings from one ISA into another in successive tax years to get a better interest rate on the whole amount. If you invest the £3K from this tax year (you will need to get a move on) you will have another £3600 allwance for 2008/9. And they are instant access unlike some of the bonds etc which pay the better interest rates.

The best plan is to check out what is available do your sums and pick whatever has the best interest rate. He could always open a Regular saver account and dripfeed his savings from an easy access account at a lower rate which is another option. My daughter's Halifax amount plus her NS&I children's bonds which she can now withdraw on her own will be spread over a range of accounts now that the bank has capitulated and agreed to issue her with a cheque book on her account, She is very sensible about money (always manages to save all her birthday and Christmas present money) and has managed so far using cash withdrawals from the "hole in the wall" and her debit card over the internet - opening savings accounts have been the only thing she has struggled with which is absolutely stupid isn't it? She can spend her money but can't save it and only the most insecure methods of withdrawal are the ones open to our vulnerable teenagers .:mad:

schoolfundraiser

Got a phone call the day after I was told that they would give my daughter a cheque book on her account. Apologies but they got it wrong and they can't on the account she has nor can she have a proper bank account until she is 18. So the compromise is that if I ring and order the cheques in advance they will issue temporary cheques on her account so that we can open building society savings accounts with her money.

It's no wonder my blood pressure was sky high when I last went to the doc is it?

schoolfundraiser

To continue with the cautionary tale - got a nag letter from the Abbey this morning to say we haven't had your ID and opening form.

Worrying as posted off with counter cheque last Tuesday registered post at cost of £4.30. Rang them and had to roust daughter out of bed to answer ID questions before they would talk to me about it. Cheque not in system. Had to ring Post Office to check delivery - yes delivered next day as promised. Had to get daughter on hand again to talk to Abbey again. Basic answer is worry until the 5 days for cheque clearance is up then ring again. Her bank who issued the counter cheque confirm that they can't be stopped.

Any advice as to where I go from here if they have lost the cheque and her ID info?

Mikeyorks

schoolfundraiser wrote: »

Her bank who issued the counter cheque confirm that they can't be stopped.

Which is not correct. If the cheque is 'lost' then it can be stopped / replaced. And no better proof than Royal Mail can prove delivery .... and it is to a Bank ... who have 'misplaced' it?

It's probably with their ISA team who (Easter intervening + run up to 6th April annual chaos) aren't up to date .... so give it a few days?

schoolfundraiser

Cheque turned up on Monday thank goodness so her ISA is offically open.