UK child bonds

[blossom]

Hi everyone. 

We are in Australia. I have two children born here. My grandma left my children £1000 each and my parents want to match that and put them in children's bonds in the uk (I can't find similar here). 

Has anyone done this?  It sounds like it could get complicated being in a different country. 

[Keith and Linda]

try this link for further info https://www.moneyadviceservice.org.uk/en/articles/childrens-bonds but I know when we tried for myself and the grandkids (whom live in the UK) and even when we were in the UK on holiday it was almost impossible. Your parents could always buy say some premium bonds and leave them to the kids in their wills and have any winnings reinvested into more premium bonds (upto max of 50,000) and they can always be cashed out at anytime anyhow.

PS not sure what the 5 year child bonds pay in interest at present, but premium bonds whilst not guaranteed average just over the 1%, ours are returning about 3% at present.

[blossom]

Thanks very much  

They do say it's possible. However, they'd still be subject to tax over here I think as it goes by where you live and here they seem to tax kids from what I've read. 

I just don't seem to be able to find much info on similar things over here. :-/

[NicF]

Have a look on the Canstar website here https://www.canstar.com.au/compare/savings-accounts/?profile=Junior+Saver&amount=%241%2C000&state=SA&provider_link=Yes%2C+only+show+results+with+links

 

[Keith and Linda]

13 hours ago, blossom said:

Thanks very much  

They do say it's possible. However, they'd still be subject to tax over here I think as it goes by where you live and here they seem to tax kids from what I've read. 

I just don't seem to be able to find much info on similar things over here. :-/

Interest is taxable, though doubt one would reach the threshold for tax purposes with only a couple of thousand quid. On the other hand premium bonds and winnings are not taxable

[Alan Collett]

See here for a discussion on the taxation of those aged under 18: https://www.ato.gov.au/individuals/investing/in-detail/children-and-under-18s/your-income-if-you-are-under-18-years-old/

Note also that premium bond winnings are taxable in Australia.

Best regards.

[Alan Collett]

https://www.ato.gov.au/rba/content/?ffi=/static/rba/content/1011353700074.htm

Re the taxation of UK premium bond winnings.

Best regards.

[Keith and Linda]

I stand corrected Alan, however the ruling seems to stop applying after 2013, so not sure what happens now though?

There would have to be some big wins for a non tax paying child to hit the threshold. Also I did say that the grandparents in the uk take out the premium bonds in their own names and that is what I was referring to as taxable/non-taxable applying to them.

[Alan Collett]

https://www.ato.gov.au/rba/content/?ffi=/static/rba/content/1012602465981.htm

Here's a more recent private ruling extract, confirming no change to the taxable nature of UK premium bond winnings.

Best regards.

Edited June 7, 2017 by Alan Collett

[blossom]

Thanks very much. I'll check out those links. It looks like the interest over 5 years would only be a couple of hundred quid, so not a huge amount. 

I also suggested the premium bonds in my parents name to my mum who pointed out that if they were to need to go into residential care then it would get very complicated as that would count as assets in their name. 

[blossom]

Thanks @Alan Collett those are the parts I'd read previously about it. So if I'm understanding it right the child bonds count as shares rather than the interest part right?  And I'll need to get them a TFN each and lodge for them. 

What I'm not sure on, the interest earnt is tied into it for five years. Do you declare how much it's gone up each year or after the five years when it would be released?

The amount they would earn should mean they don't have to pay tax anyway. 

Do you also do tax advice for sole traders?  I don't need my actual tax return done but would love to get some advice on what to claim, how the stock take affects your tax etc.  If you do, if you could send me a PM with your rates that would be great.  :-)

[Alan Collett]

14 hours ago, blossom said:

Thanks @Alan Collett those are the parts I'd read previously about it. So if I'm understanding it right the child bonds count as shares rather than the interest part right?  And I'll need to get them a TFN each and lodge for them. 

What I'm not sure on, the interest earnt is tied into it for five years. Do you declare how much it's gone up each year or after the five years when it would be released?

The amount they would earn should mean they don't have to pay tax anyway. 

Do you also do tax advice for sole traders?  I don't need my actual tax return done but would love to get some advice on what to claim, how the stock take affects your tax etc.  If you do, if you could send me a PM with your rates that would be great.  :-)

Hi blossom.

Please feel able to send an email to me: alan.collett@gmtax.com.au

Thanks!