Regular savings to pay for uni

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loulou41
loulou41 Posts: 2,871 Forumite
in Cutting tax
My husband and I have got surplus income. We want to set a regular saving account for our grandson to fund his uni fees. If we transfer £1000 a month it will be £12000 a yr. Does his mum has to declare any amount above his personal allowance & pay tax? Thanks

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  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Unfortunately this is, by a country mile, the most frequently asked question on this forum and the answer is always the same.

    Your son will not be liable for tax as there is no tax on gifts in the U.K.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 5 February 2018 at 9:47PM
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    loulou41 wrote: »
    My husband and I have got surplus income. We want to set a regular saving account for our grandson to fund his uni fees. If we transfer £1000 a month it will be £12000 a yr. Does his mum has to declare any amount above his personal allowance & pay tax? Thanks
    1. the money you give will not be taxed and is not income so has no bearing at all on his personal allowance (or mother's for that matter)

    2. as you are the grandparents, any interest earned on the money held in an account in the grandchild's name will not be subject to income tax unless your grandchild exceeds his own personal allowance through income earned by him (not through lump sum gifts from you, even if they are given every month. They are not "income" in that sense)
    https://www.gov.uk/savings-for-children
  • agrinnall
    agrinnall Posts: 23,344 Forumite
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    Are you expecting your grandson to be in a high earning job when he graduates? If not then paying university fees is unlikely to be the best use of the money, a nest egg for a property purchase deposit is potentially much more useful. Although of course if you are giving the money to him then he can do what he likes with the money anyway as you will have no control over it.
  • xylophone
    xylophone Posts: 44,532 Forumite
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    You as grandparents will be making regular gifts out of income to your grandchild.

    IHT position here

    https://www.howardkennedy.com/media/504667/gifts-out-of-income.pdf

    The gift is not coming from the child's parent so that the £100 rule does not apply to interest accruing on the child's account.

    https://www.gov.uk/savings-for-children

    Since the money saved could be a substantial amount by the time the child is 18, it could be as well to make full use of the JISA.

    https://www.gov.uk/junior-individual-savings-accounts
  • Larac
    Larac Posts: 945 Forumite
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    Have to admit if this was me I would not invest money for Uni fees but would to invest it for a deposit in a house. My son went through Uni and got a law degree and the amounts they pay back are really quite small in the grand scheme of things. I am yet to be convinced that most Uni students will pay their loan back. My daughter is doing a policing degree next year and going on their pay rates it will be many years before she pays anything back. Their generation will find it difficult to get the deposit together so hence I would focus on this,
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