Β£1000 to lock away for 15 years. Children's money.

Β£1000 to lock away for 15 years. Children's money.

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Discussion

shikari83

57 posts

55 months

Thursday 18th July
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BoRED S2upid said:
You can have multiple isas across different providers or the same provider but only pay into one each year. Who keeps track?

So yes 1 year open his and leave it there for 15 years or whatever but topping up yours and his might be complicated.
It looks like I can pay in to my standard ISA and also in to a S&S ISA within the same year so that would work. It would just mean if I ever set a S&S ISA up for myself as well as my son I would have to alternate contributions each year to the S&S ISAs.

"Can you have a Cash ISA and a Stocks and Shares ISA?
You can open up a Cash ISA and a Stocks & Shares ISA every tax year if you want. As before, it is very important that the total contributions to each account don’t exceed £20,000. To ensure you stay within the annual limit, you could invest £10,000 into each, or you could invest £5,000 in a Cash ISA and £15,000 in a Stocks & Shares ISA, or you can invest the whole £20,000 in a Cash ISA."

Jon39

6,105 posts

87 months

Sunday 21st July
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Something which worked very successfully for my own children, has now begun to be implemented for the next generation.
Money gifted from grandparents to a grandchild becomes the property of the grandchild for tax purposes, so the annual CGT tax free allowance then applies to the gift. Therefore an ISA gives no advantage for £1,000 gifts. The income tax personal allowance also applies, but not of much help now, since Mr Brown decided that children must pay tax on dividends. Previously, a reclaim could be made, because there are probably hardly any children with an income which exceeds their annual personal allowance.

Under 18s cannot hold shares in their own name, but the designated account system enables parents to be the holders, with the children technically being the asset owners. The best way now to avoid any annual fees, is for the grandparent to do the purchase in theur own name (certificated form - find a broker with low charges for this), then afterwards do a transfer into the designated account name. Brokers do not seem to do designated account purchases anymore.

The first purchase for our grandchild was earlier this year (Compass Group plc) and so far it is up 15% (after purchase costs), with the first cash dividend due very soon. Obviously eventually need a number of holdings to spread risk, but doing it very gradually is the way most people would make these gifts.

This is perhaps a different idea for you, and with such a long timescale, direct equity holdings become an historically sensible option.
Even though retail inflation may now be onsidered low at 3%, compute that out over 15 or 20 years, and it still has is a significant depreciating effect on the value of money.