saving for grandchildren

tkachev

My children's Grandparents have been saving for the children since birth. Their Nan is a joint holder of each account and makes all the financial decisions on their behalf until they are 18.

Speaking to her yesterday she said she pays full tax on the money/ interest because the money is taxed as her income.Surely the money is classed as the childrens and as non taxpayers ( they haven't reached the taxable allowance £7475 p.a.)there shouldn't be any tax to pay?The money was paid in as one lump sum years ago but I have no idea how much because I don't like to ask.

The money is usually in normal deposit accounts with 2 signatures Nan and the child, and is not in CTF or ISA funds. Anyone else in a similar position. I'd like to know if the tax situation is correct.

Elizabeth

tkachev

Yes it seems she has been taxed twice too, once from income and again on the interest on these accounts. I thought it was more beneficial for grandparents to save than for parents? Eventually these accounts will be for the childrens sole use.

Thank you Rehab for the advice on the Junior ISA accounts. I hope to start 2 for my older boys. Unfortunately my daughter has a CTF so is disqualified from having one of these which I feel is unfair on my daughter .Sadly the CTF will be allowed to wither at the expense of the Junior ISA's.

Elizabeth

tkachev

Its very confusing as the website says Grandparents can give as much they like without the interest being taxed as their income!

Elizabeth

joon51

Hi Elizabeth, I have been saving money for my grandchildren for years, they have never paid tax on there savings and if I remember correctly when I opened there accounts I think there parents had to sign a tax excempt form. Hope this helps.

Take Care Junex

barbara12

Elizabeth this is very interesting...we havent saved for our grandchildren...has we spend it on them any way...but Im glad you have got some info on it,

tkachev

That is what I thought June. Parents sign an R58 so the children do not pay tax but I've never been asked by Grandparents. I do not ask too many questions because I do not want to appear nosey or greedy but I do need to plan for my childrens future and it helps to know what they will be receiving.
I've decided to go into my local branch and ask them. Its close to where I get my bloods done so can kill 2 birds with 1 stone. Their Nan will be pretty fed up if she's been paying unnecessary tax all these years.


Elizabeth

valval

just read this not a grandparent as far as i know but with two boys who knows. but the boys had tax free accounts but you did have to fill forms in i do not pay tax at moment should i fill form in and not pay tax on my half of accounts but then how do you change it when start paying tax lol val

tkachev

valval wrote:

just read this not a grandparent as far as i know but with two boys who knows. but the boys had tax free accounts but you did have to fill forms in i do not pay tax at moment should i fill form in and not pay tax on my half of accounts but then how do you change it when start paying tax lol val

Val ask for form R58 to stop paying tax on your account. Any interest you receive will be added to your wages and if they go over the taxable limit you pay tax on that amount.

Elizabeth