Giving cash savings for child

[CoolHands]

If I want to give £3 or 4k to a 17 year old offspring, it needs to be into a junior cash isa is that right? As giving it to a savings account would mean that anything over £100 interest would be taxed

And annoyingly HL don t offer a junior cash isa as they only offer adult cash isa which of course you have to be over 18 for. Which seems stupid and annoying as this child already has a stocks and shares isa with HL so this introduces a big inconvenience

So am I right that a) I need to put it into an isa and b) it can t be with HL!

Edit by the way all the fking providers seem to now be carrying out Rachel s bidding and referring to junior stocks & shares isas as simply junior isa not indicating anything about cash isas. And many (most?) aren’t offering junior cash isas

Edited by CoolHands on Tuesday 17th March 14:41

[simon_harris]

junior ISA or premium bonds perhaps?

[alscar]

Could always do a combination of cash in limited access or frb , premium bonds and then the ISA which might also be worth looking at Investment Trust ISA's - we did this for all 3 of ours using a previous inheritance and some additional.

[CoolHands]

Hi yeah I don t want an investment I just want to get the money to her before she s 18 for uni. But would rather be in something that pays interest at least.

Seems NS&I is the only viable one as can open online etc all the others are apply by post bks. I mean, seriously

[ChrisH72]

Our son has a junior cash isa with Coventry building society.

[ThisInJapanese]

CoolHands said:

Hi yeah I don t want an investment I just want to get the money to her before she s 18 for uni. But would rather be in something that pays interest at least.

Seems NS&I is the only viable one as can open online etc all the others are apply by post bks. I mean, seriously

My boys have JPMorgan JISAs which you can open online (It used to be Nutmeg). Otherwise Tesco Bank typically have a good instrest rate for JISAs

[alscar]

CoolHands said:

Hi yeah I don t want an investment I just want to get the money to her before she s 18 for uni. But would rather be in something that pays interest at least.

Seems NS&I is the only viable one as can open online etc all the others are apply by post bks. I mean, seriously

Have a quick look at the" This is money" site - best buys /ISA's etc - I would have thought most are be able to open online.

[deggles]

There's no tax to pay on interest on gifts to children from relatives or friends, only parents. Just saying.

If you were to (entirely separately and at an unrelated future juncture) gift someone else a sum of money, that wouldn't be taxable either (subject to 7-year rule for IHT).

[trickywoo]

You can have total income up to £17570 and pay no tax on interest as you get a £5k allowance for interest above the personal allowance. If total income is above that it’s out the window.

[CoolHands]

Hi tricky I think there’s some other rule thought about gives from parents! Great eh! Taxed to death

[ChrisH72]

The rule is that if interest earned on a gift from parents exceeds £100 then tax is paid on all of it. I guess it's to stop people putting savings in their kids name to avoid paying tax on interest themselves?

Question is, how is it reported? And how does anyone know where the gift came from?

In OPs case surely you can just give them 3k. It won't generate anywhere near £100. And if they're going to need it before they're 18 you don't want an ISA anyway.

Kids ISAs are a bit weird. My wife has control of our Sons cash ISA so I can't do anything with it. She can't view it online although that's changing soon. It's why we went for Coventry as they have a local branch we can go into. Rate is 3.75% I think.

[CoolHands]

Yeah I think I might stick about £7k in and it’ll be used gradually, so likelyhood is will earn more than £100 in interest even in a savings account! Hence the need to stick it in an isa just to avoid that.

Cheers for other isa suggestions, will have a look at them

[C69]

CoolHands said:

If I want to give £3 or 4k to a 17 year old offspring...

When do they turn 18, and will they need access to the money before then?

I ask that because Junior ISA rates are pretty poor right now (c. 3.85%), whereas it's fairly easy to achieve c. 4.25% or more with 'adult' easy-access accounts (either ISA or non-ISA). If you wait until they're 18 to make the gift, then any tax liability becomes their responsibility.

You might also want to consider Inheritance Tax gifting rules and the £3k annual allowance (which can be carried forward just one year if unused, so a combined maximum of £6k could be available in any one tax year).

[ChrisH72]

If the money is for uni then she'll be 18 before she goes. I think I'd just wait until her 18th birthday as it'll make things much easier. And if she needs money between now and then you can easily pay for things as and when.

[Cabbage Patch]

If the child already has a S&S ISA with HL you could invest the gift in a short term money market fund. Pretty much as safe as cash.

[drmike37]

Or you could put it in their s&s isa and just leave it as cash (ie not actually invest it)
Can’t remember what interest hl pay on cash reserves)

[Cabbage Patch]

drmike37 said:

Or you could put it in their s&s isa and just leave it as cash (ie not actually invest it)
Can t remember what interest hl pay on cash reserves)

It’s poor. 1.51% on the first £20k.

[Jon39]

CoolHands said:

Hi tricky I think there's some other rule thought about gives from parents! Great eh! Taxed to death

If you have any concerns about death taxes, do you know about the exemption, 'gifts from excess income'?
You simply set up a regular monthly standing order, to gift money to children, or anyone else.
As long as your personal records can subsequently prove, that the money gifted is from excess income and not capital, then the gift(s) are not subject to the usual gifts tax.
There is no limit to the amount of the gifts.

[The Leaper]

Jon39 said:

If you have any concerns about death taxes, do you know about the exemption, 'gifts from excess income'?
You simply set up a regular monthly standing order, to gift money to children, or anyone else.
As long as your personal records can subsequently prove, that the money gifted is from excess income and not capital, then the gift(s) are not subject to the usual gifts tax.
There is no limit to the amount of the gifts.

Essential that you keep comprehensive records too in order to ensure HMRC are content with what you're doing should they ask, as they are doing increasingly. See form IHT403.

R.