Premium Bond Question

[S6PNJ]

Are there any legal implications to 'gifting' £30K to someone with the intent that they invest in it Premium Bonds as the 'gifting' holders PBs are already at £30K? There would clearly be an understanding that any prizes would be 'gifted' back, as would the original £30K once it became required again?

The only downside I can think of is the 'staying alive for 7 years' rule for gifting otherwise the tax man gets involved. Have I failed to consider anything (other than the trust worthyness of the individuals concerned)?

[R11ysf]

No legal implications at all. Once you have gifted them the money it is theirs and if they choose to gift you back random amounts of money that happen to coincide with any winnings they make on a totally unrelated £30k they invested in premium bonds then that is up to them.

However, as you mentioned trustworthiness is the most important as once it has been gifted you can't force anything to be gifted back.

[jonah35]

you would also have to have an iht problem too for the 7 year rule to be an issue

but, if someone won the £1m it would be hard to get them to pay it back sometimes

is it worth it purely for tax reasons?

[S6PNJ]

jonah35 said:

is it worth it purely for tax reasons?

It's not really for tax reasons, it will be a short term use of money - admitidly potentially low gain (hopefully high gain) but also low risk and possibly better than sticking it in a Post office account at 2.99% less 40% tax.

[jonah35]

S6PNJ said:

It's not really for tax reasons, it will be a short term use of money - admitidly potentially low gain (hopefully high gain) but also low risk and possibly better than sticking it in a Post office account at 2.99% less 40% tax.

is it though? the average prize fund on premium bonds is around 1.5% but dyor that's off the top of my head and not formal advice!

[Tiggsy]

The implications are simple:

The gifting of money back and forth - the only issue here is IHT and on the sums involved thats a small issue that is unlikely to ever amount to a problem. (in that, you are unlikely to die)

There is NO obligation for someone to give you the winnings back - unless there IS a legal obligation. If they win a million and bugger off you are stuck without a legal requirement stating otherwise.

PB are crap. The only reason you would do it is if you like lending the government money at a very low interest rate. Its the lotto for old people.

[S6PNJ]

Tiggsy said:

PB are crap. The only reason you would do it is if you like lending the government money at a very low interest rate. Its the lotto for old people.

Thanks for the info Tiggsy - so what would you recommend for a short term investment route that has no potential downside (ie loss) for say 3 months? Other than the Post Office at 2.9% less 40% tax, I'm not sure where else I'd place my money with zero risk.

[S6PNJ]

A quick follow up to my earlier post. Assuming I have gifted some money to relatives and I now need them to gift it back to me (ie to cash them in) can they be repaid into my account straight from NSANDI or do they have to go into the bond holders account and then be transferred into my account?
The small print on the repayment forms isn't totally clear to me.

If it has to be paid to the holders account and then to mine, well I guess the banks make a few days interest out of it!

[ATV]

S6PNJ said:

A quick follow up to my earlier post. Assuming I have gifted some money to relatives and I now need them to gift it back to me (ie to cash them in) can they be repaid into my account straight from NSANDI or do they have to go into the bond holders account and then be transferred into my account?
The small print on the repayment forms isn't totally clear to me.

If it has to be paid to the holders account and then to mine, well I guess the banks make a few days interest out of it!

You can ring the NS&I number on 0500 007 007, I have found them to be very helpful.

I'd be very surprised if they allowed bond holder's money to be paid into a third party account so my guess is no.