Child Savings - Advice please

jbanks

Hi Everyone

I have a 10 DAY old son (first born) who has now been registered and is ready to enter the world of savings!

I have read all the advice on MSE but was wondering what you the forum readers felt was the best place to open an account. I am a higher rate tax payer and his mum is a basic rate tax payer if that make any difference.

Having read the advice I realise its a little bit more of a mine field than originally thought! Looking at the Halifax 10% route but wanted some advice and to learn from your experiences. I'm based in Essex if that makes a difference as I see a lot of accounts are branch only!

Look forward to reading your advice!

Thanks

A proud dad!

IanBroadhurst

Hi there and congrats!
We have a 14 day old and on her 12th day got a halifax 10%-er.
We have one already with our first one and saved the max £100 a month via standing order. They take care of the intrest and move the amount into a Save4It account after 12 months and it starts again.
I think the interest we got on the £1200 was something like £90 ish so not too bad.

We have started to look at alternitives for the first born as at the end of the year she will have reached the max amount in the save4it account and have seen the child bonds from Abbey - 4 year lock aways and 5.45% but its not an account, its a single deposit of a chunk of money - still tax free though (from what I can see).

Agree its a mine field, but cant go wrong with the halifax route if you can keep up with the reg payments.

Ian

Mikeyorks

Much depends on whether you wish to retain jurisdiction over the money or not? As the Govt will be giving you a minor contribution to open a CTF ..... you can add to that (given the timeframe a carefully chosen investment CTF could be the best) if you're content to let go the purse strings. This is worth a read ... make sure you also open the .pdf link a couple of paras down :-

http://www.moneysavingexpert.com/savings/child-trust-fund-vouchers

Otherwise the Halifax 10% is a good way to funnel new money into a longer term account(s) (look at the 'Kids' link above .. but suspect you've done so?). If you want to keep the money in your name ... do you both use your ISAs? If not one of those is a potentially good long term home, as it resolves the tax issue.

Notwithstanding the delightful little bundle you currently have .... the male variety, in particular, can grow into wilful sods just prior to departing for Uni.;) In my experience ..... keeping your (that's the reality!) money under parental control can be a very wise move. If many £thousand is blown in the first few months of Uni, as mine was, it creates more of a strain on trust (and your subsequent finances) .... than does holding the purse strings and doing some wise budgeting on their (ungrateful!) behalf.

evi3000

I have been paying into the Halifax regular saver since my son was a month old (the maximum £100).

I am reluctant to pay money into the CTF as, frankly, you never can be sure how an 18 year old will react to being given a bundle of money. We are trying to educate our son in financial matters (he's about to turn 3 so it's only little lessons!) as we are careful with our finances and would like him to learn from us. I would like to think he'd be sensible but who truly knows?!

evi3000

cloud_dog

No ones mentioned it but......... be careful of the £100 interest pa Inland Revenue rule for monies deposited from a parent. Once interest goes over £100 in a year ALL the interrest is taxed at the parents highest rate. Of course if Grandma or Granpa deposited the money then there wouldn't be a problem ;-)

Also, don't forget to complete R85, gross interest for non-taxpayers.

In addition to the above discussions the 10% is an excellent product but may not be the best option is you have a lump sum to deposit so, if you are looking for monthly savings then its the one to go with otherwise look for the best paying normal savings account.

One last comment...........

evi3000 wrote: »

I am reluctant to pay money into the CTF as, frankly, you never can be sure how an 18 year old will react to being given a bundle of money.evi3000

Is the savings account in his name but in trust with you atpresent? If it is then I beleive at age 7 the account (monies in the account) are legally owned by the child, and they (theoretically) can do as they wish with it.

cloud_dog