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  • FIRST POST
    • liviboy
    • By liviboy 23rd Feb 18, 11:46 AM
    • 413Posts
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    liviboy
    Childrens' savings/investments/pensions
    • #1
    • 23rd Feb 18, 11:46 AM
    Childrens' savings/investments/pensions 23rd Feb 18 at 11:46 AM
    Hi all,

    I have a 2yo and I would like to start some sort of long-term savins for him, perhaps starting at something small like £20-£40 per month.

    My original thoughts was something like a child's stakeholder pension.

    However, also thinking about some flexibility...so

    I then went down the route of £20 into pension, £20 into another long-term savings idea. These would be minimum amounts with top-ups, particularly into the savings/investments account.

    However, I really don't have a clue where to start when it comes to long-term saving/investments. Pensions are quite easy and straightforward to find information on.

    Any helpful hints on where to look would be appreciated.

    Thanks in advance :-)
Page 4
    • Alexland
    • By Alexland 18th Mar 18, 8:41 PM
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    • 1,786 Thanks
    Alexland
    It seems to me that unless the donors/parents are prepared to accept that access and control belong to the child at the age of 16/18, they should not use s Bare Trust.
    Originally posted by xylophone
    For us one of the advantages of the BG CSP account is that it can be setup without Bare Trust to retain control otherwise we would just add more into the Junior ISA.

    Alex.
    • anandp
    • By anandp 18th Mar 18, 8:56 PM
    • 270 Posts
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    anandp
    It seems to me that unless the donors/parents are prepared to accept that access and control belong to the child at the age of 16/18, they should not use s Bare Trust.
    Originally posted by xylophone
    Agree, but there don't seem to be any alternatives really. JISA's and Bare Trusts have the same access problem at 18 (though perhaps not automatic access with a Bare Trust), but all others are effectively treated as if they were your own money (so taxed as yours) until its transferred over with all the gift/IT implications that ensue.
    Interested in property investment, web tech, social media, forex, equities. Also a proud father & entrepreneur of sorts.
    • anandp
    • By anandp 18th Mar 18, 8:57 PM
    • 270 Posts
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    anandp
    For us one of the advantages of the BG CSP account is that it can be setup without Bare Trust to retain control otherwise we would just add more into the Junior ISA.

    Alex.
    Originally posted by Alexland
    Isn't this then counted as part of your own estate then? For tax purposes.
    Interested in property investment, web tech, social media, forex, equities. Also a proud father & entrepreneur of sorts.
    • Alexland
    • By Alexland 18th Mar 18, 9:16 PM
    • 2,387 Posts
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    Alexland
    Isn't this then counted as part of your own estate then? For tax purposes.
    Originally posted by anandp
    Yes which is why it's in my wife's name as she can take the dividend income without affecting child benefit, we will pace withdrawals to avoid capital gains and she is younger so less likely to have an inheritance tax liability on gifting this to our son at the right time.

    Alex.
    • louloubelle79
    • By louloubelle79 19th Mar 18, 12:03 PM
    • 326 Posts
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    louloubelle79
    Yes the Bailie Gifford Childrens Plan has been quietly processing in my head and I am minded to open one for my 2 yr old son as it would be good to continue investing for him with a small regular contribution after we have added the 2 tax years of Orbis JISA contributions into no-fee units.

    Alex.
    Originally posted by Alexland
    Hi Alex; so Iím trying to understand this can be set up in my name for the child? How does this differ to an adult ISA? Sorry if daft Q

    https://www.bailliegifford.com/en/uk/individual-investors/literature-library/individualintermediary-non-fund/investment-trust/childrens-savings-plan-application-pack/
    • Alexland
    • By Alexland 19th Mar 18, 12:47 PM
    • 2,387 Posts
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    Alexland
    Hi Alex; so I!!!8217;m trying to understand this can be set up in my name for the child? How does this differ to an adult ISA? Sorry if daft Q

    https://www.bailliegifford.com/en/uk/individual-investors/literature-library/individualintermediary-non-fund/investment-trust/childrens-savings-plan-application-pack/
    Originally posted by louloubelle79
    Yes, it can be setup either under the adult's name (by just registering online) or in trust in the child's name (by completing the paper form).

    The children's plan is not in a tax free wrapper like an ISA so any dividends or capital gains could be taxable if you exceed your annual dividend and capital gains tax allowances. The dividends still count as income if you are near the child benefit claw back level, etc. We chose Monks as it aims for growth so has a low dividend and we will withdraw it across multiple tax years if capital gains becomes a concern. We have set it up for £50 per month via direct debit and the first payment is going out later this month.

    If you want it simpler then BG do offer an adult S&S ISA but it's £32.50 +vat per year.

    Alex
    Last edited by Alexland; 19-03-2018 at 12:50 PM.
    • Reaper
    • By Reaper 19th Mar 18, 2:10 PM
    • 6,243 Posts
    • 4,498 Thanks
    Reaper
    Hi Alex; so Iím trying to understand this can be set up in my name for the child? How does this differ to an adult ISA? Sorry if daft Q

    https://www.bailliegifford.com/en/uk/individual-investors/literature-library/individualintermediary-non-fund/investment-trust/childrens-savings-plan-application-pack/
    Originally posted by louloubelle79
    The children's plan is not in a tax free wrapper like an ISA so any dividends or capital gains could be taxable if you exceed your annual dividend and capital gains tax allowances.
    Originally posted by Alexland
    Just to clarify - you can set it up either as:
    Designated Account - means it is taxed as YOUR money
    Bare Trust - means it is taxed as THE CHILD'S money.

    Although neither is tax free the child has an adult's tax allowances which are probably not being used at the moment so in practice is unlikely to be taxed. Whereas there is more chance you have already used up your own tax allowances.
    • xylophone
    • By xylophone 19th Mar 18, 2:35 PM
    • 25,371 Posts
    • 14,967 Thanks
    xylophone
    Hi Alex; so I!!!8217;m trying to understand this can be set up in my name for the child? How does this differ to an adult ISA? Sorry if daft Q

    https://www.bailliegifford.com/en/uk/individual-investors/literature-library/individualintermediary-non-fund/investment-trust/childrens-savings-plan-application-pack/

    Explained on page 7. This is not a JISA or an ISA.
    • anandp
    • By anandp 19th Mar 18, 4:53 PM
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    anandp
    Just done some more research and the only two investment accounts I can find which seem to be directed at grandparents saving for their children are with Hargreaves Landsdown and Baillie Gifford. Both seem to make it very easy to open the account in a bare trust.

    I'm only searching for options under £100 per month, so others may be available at the higher levels.
    Interested in property investment, web tech, social media, forex, equities. Also a proud father & entrepreneur of sorts.
    • Reaper
    • By Reaper 19th Mar 18, 4:59 PM
    • 6,243 Posts
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    Reaper
    Just done some more research and the only two investment accounts I can find which seem to be directed at grandparents saving for their children are with Hargreaves Landsdown and Baillie Gifford. Both seem to make it very easy to open the account in a bare trust.
    Originally posted by anandp
    I think you will find most of the Investment Trust companies offer it plus a variety of others. eg Foreign & Colonial
    https://www.fandc.com/uk/private-investors/savings-plans/savings-plans-range/childrens-investment-plan/

    And yes a Bare Trust is very simple and the investment companies will set it up for you. You only need to fill in a form and choose who will run it.
    Last edited by Reaper; 19-03-2018 at 5:04 PM.
    • Alexland
    • By Alexland 19th Mar 18, 5:26 PM
    • 2,387 Posts
    • 1,786 Thanks
    Alexland
    I think you will find most of the Investment Trust companies offer it plus a variety of others. eg Foreign & Colonial
    https://www.fandc.com/uk/private-investors/savings-plans/savings-plans-range/childrens-investment-plan/

    And yes a Bare Trust is very simple and the investment companies will set it up for you. You only need to fill in a form and choose who will run it.
    Originally posted by Reaper
    The F&C option at £25+vat PA is going to be expensive for a small contribution rate.
    • sam_scott
    • By sam_scott 21st Mar 18, 7:45 PM
    • 30 Posts
    • 4 Thanks
    sam_scott
    Junior ISA and pension. Given the long term nature of the savings I would suggest more risk/higher reward eg. stocks and shares, probably emerging markets etc.
    • louloubelle79
    • By louloubelle79 13th May 18, 11:27 AM
    • 326 Posts
    • 164 Thanks
    louloubelle79
    Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

    http://www.hl.co.uk/investment-services/investing-for-children
    • bowlhead99
    • By bowlhead99 13th May 18, 11:49 AM
    • 7,822 Posts
    • 14,288 Thanks
    bowlhead99
    Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

    http://www.hl.co.uk/investment-services/investing-for-children
    Originally posted by louloubelle79
    If you open up a 'junior investment account' it will be in bare trust for the child which as you can see from the comparison table on that page you linked, means the child is entitled to assets in the account from age 18; a bare trust means the child (rather than the person putting the money in) is the beneficial owner for tax purposes after the donation into the account has been made.

    If you click through from the investing for children overview page to the junior investment account page (http://www.hl.co.uk/investment-services/investing-for-children/junior-investment-account), they note that
    "It's also possible to open a Fund and Share Account that's designated to a child. However this does not create the same legal arrangement as a bare trust, and there are fewer, if any, tax benefits to be had."
    So if you have decided on HL as your favourite provider, but you are not happy with it being the child's money at 18, then don't use a junior investment account under bare trust and don't use a JISA, simply open up your own "Fund and Share" general investment account and ask them to put a designation on the account name (e.g. "re: [the child's initials]" at the end), so that you'll remember that that particular account is one that contains money you intend to give to the child in the future.

    But if you were to do that, as it is your account, any income or gains are taxable on you, and putting money in an account that you designated with a funny account name does not count as a gift for inheritance tax purposes.

    Some people investing for their children use JISAs, some use bare trusts, and some use their own accounts (either a general investment account, ISA or pension) with the intention of later gifting the money to the child when they see fit. All routes have their advantages and disadvantages when looked at from different perspectives.
    Last edited by bowlhead99; 13-05-2018 at 11:52 AM. Reason: format errors from copying the quote
    • anandp
    • By anandp 13th May 18, 3:35 PM
    • 270 Posts
    • 30 Thanks
    anandp
    Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

    http://www.hl.co.uk/investment-services/investing-for-children
    Originally posted by louloubelle79
    As the above poster has said, yes bare trusts funds are technically the child's at the age of 18. With some bare trust forms you can put a higher age but I'm not sure how you would enforce that.

    I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?
    Interested in property investment, web tech, social media, forex, equities. Also a proud father & entrepreneur of sorts.
    • Reaper
    • By Reaper 13th May 18, 7:25 PM
    • 6,243 Posts
    • 4,498 Thanks
    Reaper
    With some bare trust forms you can put a higher age but I'm not sure how you would enforce that.
    Originally posted by anandp
    The company only accepts instructions from the trustees, even when the child turns 18. So while legally entitled to the money if the trustees refuse to hand it over the child would have to replace them, which is surprisingly hard to do.
    I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?
    Sounds odd to me. How do they know what tax to report to Inland Revenue? They need to know whose tax affairs the money relates to.
    • bowlhead99
    • By bowlhead99 13th May 18, 9:00 PM
    • 7,822 Posts
    • 14,288 Thanks
    bowlhead99

    I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?
    Originally posted by anandp
    Perhaps the form to which you're referring is a written record that initially constitutes the trust and confirms that somebody A (and perhaps somebody else B) as trustee(s) are running a trust for the benefit of somebody C with some basic facts - effectively a simple trust deed.

    HL may not need to see that entire piece of paper itself, but presumably they need to know the details/identites of the trustee(s) and beneficiary as part of the process of establishing an account; though maybe they do this with you online. Some financial services businesses have a greater or lesser appetite for having sight of all the possible documentation that could be required as part of their customer due diligence / AML/ 'know your client' processes.
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