So, thoeretically, by paying CB directly into a childs account, it would be subject to the £100 rule...

Those pesky HMRC'ers!!!

Ta CMK

mooreaz:

Hey CMK,

One thing you might be able to help me with...

I know that interest over £100 pa is taxed as if it is the parents income if the funds producing it come from the parents. Now do you know what the rule is over Child Benefit?

pebrey mentioned getting the Child Benefit paid straight into the child's account. Now my view is that this has not come from the parents and so is not liable to the £100 rule.

In this case, so long as the account is only credited with CB payments and/or gifts from outside the parents, it is not subject to the tax rule.

I know, I should have asked the Revenue, but have never got round to it and just remembered this morning.

Thanks,

mooreaz - Child benefit is paid to the Parents even though it's for the intended benefit of the child, so it would be treat in exactly the same respects... if the money was then invested by the Parents and it was held in the Parents name.

This rule and limit exists to deter some unscrupulous Parents from investing their own money in the Childs name, as a means of obtaining tax free interest... really intended for themselves. There would be nothing to stop you gifting the said amount to the Grandparents for investment as above though, to be held under the Grandparents name in trust for the named benefit of the child.

http://www.grandparents-association.org.uk/law-corner.html#investing

This should be of interest to you http://www.whatinvestment.co.uk/making-money/investment-funds/guides/1101042/funding-your-childs-future.thtml

Hey CMK,

One thing you might be able to help me with...

I know that interest over £100 pa is taxed as if it is the parents income if the funds producing it come from the parents. Now do you know what the rule is over Child Benefit?

pebrey mentioned getting the Child Benefit paid straight into the child's account. Now my view is that this has not come from the parents and so is not liable to the £100 rule.

In this case, so long as the account is only credited with CB payments and/or gifts from outside the parents, it is not subject to the tax rule.

I know, I should have asked the Revenue, but have never got round to it and just remembered this morning.

Thanks,

A Grandparent; holding the account in their name for the named benefit of the child is the most efficient way.

As above the method is to name the child as the clear intended beneficiary, with the account held in the trust of the Grandparent. Then should the worst happen the trust fund would pass outside of the GP's estate to the child or the next suitable adult..... if the child has not yet reached the age of 18. Which in this case; would be you as the parents to temporarily hold for the benefit and on behalf of the child as legal guardians, until the child acquired the age of majority..

One last question - if we set the account up in the grandparents name, are there any implications if they get run over by the proverbial bus? i.e. would the money automatically pass to the kid in trust? Or would the money become part the their estate? Or would I be able to somehow take control without any take implications?

Thanks again,

Paul

To clarify : only the interest in excess of £100 / year is taxable, if held in the Parents name.

You as the lower rate taxpayer would be better off holding the account in your name only, then interest would be taxed at your rate, not your Wife's higher 40% rate.

Minimum ages are 16 for cash ISA and 18 for stocks and shares ISA.

A Grandparent; holding the account in their name for the named benefit of the child is the most efficient way.

There's nothing stopping you having a ISA (1) held by you...for the later benefit of your child, although at the moment ISA rates are not that brilliant in comparison. It may be more beneficial to look for the highest achievable rate normal savings account, and let it be subjected to tax at source.

As mooreaz quite rightly explains above though, your CTF voucher must be used in a separately recognised CTF fund.!

Interesting...

But excuse me for a) teh slow response - its been kinda busy with baby around here! and b) ignorance!

In terms of the £250 from Mr Brown, I will open that account and let it run with his own money somewhere...

For the rest of it, I wasn't aware of the tax rules (Although it does not surprise me!).

To clarify, are we saying that interest in excess of £100 per year will be taxed? Or income into the account?

...and if its interest, who's tax rate? Mum or Dad? I earn only 6K per year (My company = divi) but Mum is on 40%...

..and is there a way around it? Can the kid have his own ISA?

basically we are planning to pay all the child benefit in, so £17 per week - £900 ish per year...

Thanks again for the help,

Paul

Only interest over £100 is liable.

You can give a child or invest on their behalf as much money as you like. But if you're a parent or step-parent and the money you give your child earns more than £100 interest a year, this interest will be taxed as if it were your own.

The £100 limit only applies to parents and step-parents. Grandparents and other adults who give money to children are not liable to pay the tax if the interest exceeds £100 a year.

Moral of the story - let the Grandparents make the gift.!

The person above me is correct in saying that their is no way you can get around this unless you open an account in your child's name the only problem with this ,is that once you have invested more than £100 it will then be taxed on your personal tax rate


Roy

pebrey:Hi, Just had Baby no.1

Congratulations for starters...

pebrey:Money must be available for Me & Mum to draw on at any time should t be required

We don't want the funds to transfer automatically to him on his 18th birthday

The voucher that you receive for the CTF must be used in a recognised CTF account. This will not be permitted to be drawn on by mum or dad and will transfer completely to Baby no.1 on their 18th birthday.

There is no way around this for the funds given to your child by the government.

However, this does not mean you can't open a separate account, outside of the CTF wrapper in your childs name which you do have control over. You can then dip in and out of that till the cows come home and if, God forbid, your little'un would want to go blow it on a world wide pi$$ up, you can just close it before it becomes theirs.

If it helps, to give you an idea we have done a mixture. We have the CTF vouchers (plus a little top up) in an F&C CTF investment vehicle. We also save separately, using the child allowance, into a kids savings account at the Nationwide.

Hope this helps...

Hi,

Just had Baby no.1 and have a few questions. I know there is the trust fund thingumy that the government sets up, but was wanting to do something slightly different. Main points are:

- Money must be available for Me & Mum to draw on at any time should t be required (I wound up travelling the country / Europe with sport when I was 15, so if a similar thing were to happen to baby the funds might need to be accessible)

- We don't want the funds to transfer automatically to him on his 18th birthday (To prevent any possibility of a 50K world wide *** up!)

Is there anything around that might allow this? Or is the answer to set up a savings account in our name and not put it in his name?

Any advice greatly appreciated.

Paul