Swapping cash gifts for children

[Newc]

Anyone looked at this ? Investment income over £100 from cash gifts to your own children are taxed at your marginal rate. Could I give a lump sum to a friend’s child and have him do the same for mine, and therefore the income would be part of the child’s own personal allowance ? Obviously there are potential IHT considerations for larger amounts, but would the underlying idea work ?

[cannedheat]

On this note, I'm sure I learnt recently that investment accounts designated in a child's name but held by the parent are taxed in a certain way, but if held by a grandparent on behalf of the child, they're not.

I cant't remember the specifics but it ties in with the same rules you've mentioned.

[XG332]

I know somebody who is willing to swap a clild for gifted cash.

[missdiane]

XG332 said:

I know somebody who is willing to swap a clild for gifted cash.

That's how I read the thread

[seaninog]

missdiane said:

That's how I read the thread

+1 !!

[Jockman]

Why not just open a pension up for your own child???

Stick in £80 to a PP and the Govt will automatically add a further £20. That's a tax free return of 25% which I'm sure you will agree is difficult to beat elsewhere.

Ok, Ok the money becomes untouchable until at least 55 years, but look at all that growth in the intervening years.

Certainly worth a thought

[Newc]

Yes, I will admit the title could have been better phrased, though actually there are times when it looks like the best option.

Thanks for the thoughts so far.

[Bing o]

Jockman said:

Why not just open a pension up for your own child???

Stick in £80 to a PP and the Govt will automatically add a further £20. That's a tax free return of 25% which I'm sure you will agree is difficult to beat elsewhere.

Ok, Ok the money becomes untouchable until at least 55 years, but look at all that growth in the intervening years.

Certainly worth a thought

And then they can only take out 25% of it. Great.

[Jockman]

Bing o said:

And then they can only take out 25% of it. Great.

Under current rules, yes you can only take out 25% tax free at the moment, but the other 75% can be put towards, say income drawdown.

You still get access to all 100%. You don't lose any of the money.