Told I can’t use this premium bonds money for our house deposit as it’s illegal?

[kiav]

We have two premium bonds accounts. One is in my name and one is in DD’s name. We have 50k in mine and 30k in DD’s.

we are now in a position to buy a home. We will need the 50k for a deposit and we also need the 30k for things like stamp duty, new sofa, to do a small bit of work that needs doing in the downstairs etc.

I have been told by a friend it’s illegal to use Dd’s 30k for this? This is money we have saved from our income but now our circumstances have changed we need it. Surely premium bonds should tell you this before you invest??

I've already said I have evidence that you can cash in your child's premium bonds. I don't know either way if you can spend it, and can't find any sources.

That's why I am asking people who are speaking with such certainty for evidence of it from a reliable source.

This evidence will answer the OP's question.

I think a previous poster's pocket money analogy sums things up.

If you gave a child a tenner as pocket money and then decided to take it back, that wouldn't be 'stealing' or 'misappropriating' your child's money. This is exactly the same, but just a larger amount.

If the money had been gifted to the child by a 3rd party, then things would be different - but this is simply a parent giving and then taking back their money.

I don't think there are any moral implications and, as far as I'm aware, there certainly aren't any legal implications either.

You can't use your daughter's money - it's hers because it's in her name and you can't own more than £50,000 of premium bonds as an individual.

You tried to get around this rule by putting the extra premium bonds in your daughter's name but that means the bonds (and I think all the winnings are hers).

Please could you tell me which law says it’s in trust? Asking genuinely as we have a similar situation.

In the UK, Premium Bonds are a savings product issued by NS&I (National Savings and Investments), and they can be purchased for yourself and for children under 16 by a parent, guardian, or even a grandparent. When it comes to ownership, any Premium Bonds bought for a child are held in the name of the child, and the winnings (if any) belong to the child, even though an adult manages the account until the child turns 16.

Taking out the money from a child’s Premium Bonds and using it for personal gain would be ethically questionable and could also be legally problematic. The money legally belongs to the child, and withdrawing it for purposes other than the benefit of the child could breach fiduciary duties or legal responsibilities. In practice, the guardian is expected to act in the best interests of the child when managing the funds, and diverting them for personal use may potentially lead to legal consequences, especially if it's challenged later.

If an adult wishes to reclaim money invested on behalf of a child, it should be done transparently and for the child’s benefit. Misusing it could cause legal disputes, particularly around guardianship, trust laws, or financial abuse.

NS&I generally expects that the money withdrawn is used for the child’s needs (e.g., education, future financial security). I think buying a family home -could- qualify but it’s definitely a grey area.

oh balls, she's 5, it's your money, you put it in there for her, you now need it. i have premium bonds for my son, they are linked to my account. it's not like a child isa where you can't access the money. ignore all the morons and enjoy your new sofa xx

Another poster speaking with certainty - but with the opposite view - do you have a source describing the limitations on what a child's money can be spent on?

OP, I think its clear, despite certainty in opposite directions, that no one is able to provide any evidence either way. I certainly think you could get away with it, and no one would be any the wiser, but I'm afraid I'll have to recommend you get advice from a solicitor.

The legal opinions here are:

It's effectively yours, do what you like with it.
It's hers, but spending it on renovations is to her benefit, and you can do that.
It's a bare trust and you can't touch it.
It's hers, not a bare trust, and you can't touch it.

If you manage the account you can take the money out. The nominated adult manages the account until the child is 16 so I think you can cash it in.

Maybe NS&I should stop any person other than the named account holder from withdrawing the funds.
It would remove the temptation to place money under a child's name to avoid tax due on the money otherwise invested.

Yes sure, The Children Act 1989 governs the responsibilities of parents and guardians in managing a child’s welfare and property. Section 3 of this act defines “parental responsibility” as including the responsibility to safeguard the child’s property and to manage it responsibly until the child reaches adulthood. This includes any financial assets or savings in the child’s name.

In this case particularly using a child’s funds for personal or family reasons without securing clear benefit for the child could be viewed as failing to properly safeguard their property. All outside of trust law which is more complicated and usually a trustee will have recommendations to follow.

When money is held for children in their name they are given the benefit of tax relief which while I’m sure plenty of people make their own mind up about (but in this case as a previous poster has said the fund sources will be considered by a legal team).

That's fraud.

Could you either a) make a share of the house in her name (when you move she'd get a similar share, when you downsize she'd get cash) or
b) transfer to your DH now, but it sounds like this would still get investigated because it would be a recent deposit.

I had a flat before we got married and about 10 years ago I transferred 10% of it into his name so he can make decisions and we can share the tax on the rent. We just signed a simple document outlining his share.
30,000 out of a whole house is going to be less than 10% I'd think.

I have been told by a friend...

Oh yes? Are they a conveyancing solicitor or an accountant?

Did you keep the prizes too or put them in DD’s account?

"no-one would be any the wiser" well, no, they would.

Solicitors acting on house sales and purchases have a duty under anti money laundering laws to ascertain the source of the funds and see evidence of this. Once the poster shows an account in the daughters name the solicitor should be clear that it cannot be used.

Putting your own funds into a tax free account in someone else's name (presumably because you have filled your own allowances) is tax evasion. Taking the income from that account is fraud.

Yeah, you'll "get away with it" generally, I expect many do. But you won't be able to use it to buy the house.

No it isn't. 🙄

It's an option you can select when buying Premium Bonds.

You're fine. Whether you saved it for her or you didn't, you use it on what's best for her.

She's using the money for renovations, not for the deposit. (I made the same mistake) so none of this applies.

Thank you so much! Would renovating a house be a clear benefit to the child, do you think?

But she is using it for the stamp duty.

Wouldn’t that go through the solicitor as well?

Yep, it would.

And not "none of it applies". It's still illegal. Just less likely to get caught since no-one else is involved. I doubt builders bother to check the source of funds 🙂

Solicitors have to check the source of all funds, not just house purchases. As do car dealers, art dealers....many places.

Possibly, you would need to consult your conveyancing solicitor. It would be ideal to make a record of the funds as it needs to be transparent and genuinely in their best interests. Examples of this would be, if the house is sold in the future, would the child be entitled to a share of the proceeds, reflecting their contribution.

In reality most people would take the funds without any thought, but that doesn’t make it legal.

That's true. I think the solicitor only checks the acount it comes from, but it's a risk.

The ask for the source of the funds and trace it. So yes, the first answer is "my account", then you have to show that account, the next question is where did it come from to get into your account?

And there you have it.

I had no end of trouble waiting for an ex to buy me out of a house and use the funds to buy my new house. I didn't have a mortgage so it wasn't that, it was the solicitor being able to track back the funds. I had to get a signed agreement with him that was then used to show why I had the money.