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Moving children savings to my account

Oxecon
Posts: 2
Joined: Sun Mar 13, 2016 1:50 pm

Moving children savings to my account

Postby Oxecon » Tue Aug 15, 2017 6:11 pm

I am the nominee account holder for my daughters child savings account. This has close to £10k as a result of all child benefit being paid into the account for 18 years and some funds put into it from grand parents. We (the parents) have not directly put in a penny.

She is coming up to 18 and does not yet know about the account. I plan to move the account to my name before 18 so she does not have the ability to spend it. Long term, we plan to gift it back to her as a deposit for a house when we she eventually buys a house, or say when she is 25 (I.e. After university).

Is there anything in terms of tax (or legally for that matter) that I should be aware of. After the move I know that I would be liable for any tax on the savings held in my name, but this would be well within the new annual savings interest free allowance, as we have no other substantial savings outside ISAs.

Cheers.

maths
Posts: 6980
Joined: Wed Aug 06, 2008 3:25 pm

Re: Moving children savings to my account

Postby maths » Tue Aug 15, 2017 8:35 pm

Perhaps in practice what you propose is not all that uncommon.

However, it may constitute a breach of trust.

At present you hold the account as bare trustee for your daughter. Accordingly, you are under various duties and obligations as trustee.

For income tax purposes any interest generated on the account is the liability of your daughter as beneficiary.

At age 18 your daughter can call for the trust property (ie cash at bank) to be transferred to her. Prior to her attaining age 18 it may be possible for a so-called settled advance to be made under which in essence the age at which she may call for the monies is changed to say 25.But it is necessary to be able to demonstrate that such an advance is for the benefit of your daughter. It seems that prima facie you feel that she simply shouldn't have access at age 18 but there is nothing in your post to suggest that it is for her benefit.

bd6759
Posts: 2340
Joined: Sat Feb 01, 2014 3:26 pm

Re: Moving children savings to my account

Postby bd6759 » Tue Aug 15, 2017 9:02 pm

A simple solution is not to tell her about the account until you think she needs to know.

Strictly the the child benefit is settled capital, and any interest earned has been taxable on you.

maths
Posts: 6980
Joined: Wed Aug 06, 2008 3:25 pm

Re: Moving children savings to my account

Postby maths » Tue Aug 15, 2017 10:44 pm

A simple solution is not to tell her about the account until you think she needs to know.


Except this approach cannot be substantiated by law.

Trustees are under an obligation to notify a beneficiary of full age (ie 18 England/Wales) of his interest under a trust. This is one of a trustee's core duties.

AGoodman
Posts: 187
Joined: Fri May 16, 2014 3:47 pm

Re: Moving children savings to my account

Postby AGoodman » Wed Aug 30, 2017 11:44 am

Maths - you are absolutely correct but in practice she is not going to sue her parents for not telling her. She is far more likely to be upset if she discovers they've taken her £10,000 and stuck it in their own account. In trust terms, this is several rungs removed from failing to inform.

There won't be any power to create/extend trusts as the bank account will be a nominee arrangement. The only legitimate way to delay the daughter obtaining the funds is likely to be to invest the monies in an insurance bond or fixed term investment that will defer encashment.

maths
Posts: 6980
Joined: Wed Aug 06, 2008 3:25 pm

Re: Moving children savings to my account

Postby maths » Wed Aug 30, 2017 12:30 pm

AG I agree in practice that children suing parents most unlikely. I was responding to the particular question posted:

Is there anything in terms of tax (or legally for that matter) that I should be aware of.


Being a bit pedantic (for the purpose of discussion) when you refer to "legitimate" as I think we agree it's not legitimate to not inform the daughter. Arguably, if the intention is not to inform the daughter the parents could simply transfer the monies to their account and in due course pay over some estimate as to how much interest has accrued on her portion. This would be far simpler than investing in a single premium bond.

I note that some of the monies in the current account were provided by grandparents. Strictly speaking this would require the daughter to disclose interest on this amount on daughter's tax return.

Theory versus the real world !


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