Income support & childrens savings

Upya · 9 January 2009 at 4:44PM

Hi there,

I currently claim income support for myself and my wife as we are both in receipt of Carers Allowance as we care for our two disabled sons.

My eldest son who is almost 6 is in receipt of highest rate DLA care & mobility, my youngest son has just been awarded higher rate DLA care.

On receiving the award letter for my youngest son, I thought about putting this benefit into my son's bank accounts (split 50/50) in order to pay for future expenses, adaptations, care, etc.

On discussing this with someone recently, I have been told that any money in my son's accounts will count towards the savings/capital limit for my claim for income support (which I believe is between £6,000 & £16,000).

Now on hearing this I am a bit concerned as since my sons have been born I have been paying £10 each into their Nationwide Smart2save accounts on a weekly basis, from their child benefit.

With my eldest son being almost 6, this £10 per week, plus any Christmas or birthday gifts from friends & family have added up and he now has over £4,000 in his account. With my youngest son having almost £1,000 in his account already.

Now if their savings do indeed count towards my savings & capital limits in regards to my income support, I will obvious have to rethink not only putting part of their DLA money into their accounts, but also the regular £10 per week savings.

So if anyone could confirm that this is or is not the case, I would be most grateful, I have searched these forums and google and can't seem to find a definitive answer.

Many thanks in advance.

cw18 · 9 January 2009 at 5:07PM

Taken me a few minutes, but I've managed to find a thread I saw a while back about the same issue

Try here

Oldernotwiser · 9 January 2009 at 5:47PM

If the money is for future expenses, house adaptations etc., why have you put it in accounts in your sons' names?

p00hsticks · 9 January 2009 at 5:58PM

I think you also need to be wary of breaking some tax rules here. The Child benefit is paid to you, not your children, and if you are putting it into accounts in there names then you;re effectively giving it to them. That being the case, once the accounts are earning more than £100 a year in interest, the interest counts as your income, not the childrens, and may therfore be eleigible to have tax paid on it. You have to make sure it's declared to the tax man - see the '£100 rule' in the link below.

http://www.hmrc.gov.uk/tdsi/children.htm

[Deleted User] · 9 January 2009 at 6:27PM

I dont think that with interest rates as low as they are that interest will be that big a problem,however from memory i`m almost certain that upto £3000 of savings in a childs account doesnt affect means tested benefits,might be an idea to check with CAB or welfare rights

DaisyFlower · 9 January 2009 at 11:18PM

I think the 3K child savings is related to the CTF that the government start you off with as it cannot be accessed until a child reached 18.

Any other child savings that can be accessed need to be declared.

[Deleted User] · 9 January 2009 at 11:52PM

DaisyFlower wrote: »

I think the 3K child savings is related to the CTF that the government start you off with as it cannot be accessed until a child reached 18.

Any other child savings that can be accessed need to be declared.

Yes they need to be declared,but my point is that I dont think they make any difference,obviously if they have just been moved from the parents account to a childs account its deprivation of capital,but if its longer term savings then i`m 98% sure they dont count

Oldernotwiser · 10 January 2009 at 11:02AM

woodbine wrote: »

Yes they need to be declared,but my point is that I dont think they make any difference,obviously if they have just been moved from the parents account to a childs account its deprivation of capital,but if its longer term savings then i`m 98% sure they dont count

They don't count (I think) for benefit purposes but it sounds as if the OP might be putting money in the children's names to avoid paying tax on these savings. Not everyone realises that if a parent does this with their own money (which CB actually is) that it remains the parents' money and isn't tax free.

It's worth pointing this out although it's not exactly what was being asked.

Upya · 10 January 2009 at 7:44PM

Many thanks for your replys.

I am aware of the £100 rule and now my eldest son has reached £4,000+ savings, he has reached that amount and I need to declare his interest to the taxman.

I am not putting regular savings into my childrens accounts to avoid tax, merely hoping to save a little money for their future, like a lot of parents do, unfortunately because I had to give up my career, I can not save as much for them as I would like.

I don't think the Child Benefit issue is relevant, I save them £10 a week each, which I rationale in my head as the child benefit which I would of spent on them anyway. The fact is the actual £10 that goes into each of their accounts could have come from any part of my income.

As mentioned before, their accounts have reached their balance through regular savings from their birth through to now, so I hope that this wouldn't be classed as deprivation of capital.

I'm not sure if we have really reached a definitive answer here, so if anyone else knows for sure the rules regarding this, I would be most grateful.

Thanks again for your help so far.

[Deleted User] · 10 January 2009 at 10:08PM

As you get I/S you need to declare the £4000 in the account that has that amount and it will definately affect your benefit(I`ve looked that up since yesterday)the other account which has £1000 also needs to be declared,but shouldnt affect benefits
If you read my thread on 2009/10 benefit rates it states quite clearly that the limit is and will remain £3000

Income support & childrens savings

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