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??

Legally you can. Morally probably not.

We’ve saved for DD in our name for that reason, shit happens and you need access.

While you can cash in the bonds, you're likely to fail the Anti-money-Laundering checks when it becomes apparent that you had not only the maximum 50k in your own bond, but an additional 30k in a child's bond which you've now treated as your own.

That, I'm afraid, is likely to get you into some hot water not just with your lender but also with HMRC.

It would remove the temptation to place money under a child's name to avoid tax due on the money otherwise invested.

But you're under no obligation to invest the money. The Revenue hasn't been deprived of anything at all. You could have just withdrawn it all and kept in a suitcase under your bed, or in a non-interest bearing current account, PLUS, we all have a tax free interest allowance anyway, which this wouldn't have met!!

There is no point missing out on a house, or getting in debt when the money is sitting there. You are not morally bound to replace it - you are a family until she is an adult, and you have pooled finances with your child, which you are in control over, as her guardian.

Money laundering? 😂

noun: moneylaundering
the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.
"he was convicted of money laundering and tax evasion"

You can cash in the bonds, put the money in your savings. It came from your savings, it's quite legal for you to withdraw the money.

Buy the house. You'll be spending a lot more than 30k in supporting your child over the years.

Money laundering?! What money is she laundering? None. What has she deprived HMRC of? Nothing. There is nothing wrong here at all.

Yes, but you have already given it to her. If you have a good job and buy people lovely, expensive Christmas presents and then lose your job in January, you can't go and ask them all to give their presents back. This is the same situation. Once you've given it away, it's gone.

What nonsense

so if the OP lost her job she wouldn’t be able to tap into the money to help feed, house and clothe her daughter?

😆 😆 😆

The user name is flatulence 😂😂

She's five. You have a deposit for a family home. 100% use it. It's not illegal.

I have premium bonds for my 4 year old which I put £50 a month into.

One point last year I had to use £500 towards a car repair. Didnt even question if that was okay or not.

Because that's the child's money, not hers, and it's not the child's responsibility to house, clothe and feed herself. As the parent, you have to use YOUR money to feed, clothe and house your child. If they have money, whether it was given to them by you or someone else, it's theirs, not yours.

Some replies on here are crazy! Imagine these people giving advice to real life friends who take it seriously

The money is saved for your daughters benefit.

Is it going to be beneficial to herf for you to buy a house? Almost certainly.

Is there a 'third party' who might object? No

I might have a chat with your solicitor about the money laundering checks just in case that might cause any issues

This is what I've managed to glean from searches.
As I understand it, the maximum you can hold is 50k. Above that it is not eligible to win prizes.

You have opened an account for your daughter. She / that account is eligible to win prizes. You manage her account and the NS& I will notify you of any prizes she wins. All prizes won on premium bonds are tax free.

You can cash in the money in her account by filling in an application form to transfer the funds to your account. But then, as I see it, you would be over the 50k limit and because of this, NS & I would transfer the excess to your nominated bank account.

The conveyancing solicitor will pay your deposit, fees etc and the stamp duty owed and will have to know the source of that money, for money laundering regulations purposes.

Whether the solicitor will be interested that it is over NS & I's limit for holding money in premium bonds and winning prizes I don't know but in any case NS&I would transfer the excess out of the bonds and into your nominated bank account.

You could ask the solicitor. If you were worried about potential complications with HMRC*, you could pay the house purchase deposit and take out a short-term bridging loan or use a credit card, personal loan from child's father or other family members to pay the stamp duty, leaving your daughter's bonds alone until house purchase completed. Worry about the works and the sofa afterwards.

*MSE website has this about the 50k limit - which sheds some light on the subject, but as NS&I already knows you have opened an account for your daughter, it would appear not be relevant:

What happens if I save more than £50,000?
The maximum holding limit of £50,000 is strictly enforced – if for any reason you've more invested and NS&I catch on (for example, due to different spellings of names or other missing information), it will repay any surplus back to your nominated bank account, although you may have to repay any prizes won in that time via bonds that were ineligible because of the maximum holding limit being exceeded. These prizes are then reallocated to the next eligible bond drawn in the relevant month's draw.

I

The thing is, it just feels like you want to game the system and have it both ways.

If you want to be able to use the money for yourself, then keep it in an account in your own name and pay the tax.

If you want to avoid the tax by putting it in your daughter's name, then you can't have free and full use of it without being asked some difficult questions which HMRC might be interested in.

Completely understand circumstances change - that's why you shouldn't save things in your child's name unless you are certain you won't need that money. Tucking it in your child's name to avoid tax but with the intent to use it yourself is tax fraud 🤷‍♀️

I’d have no issue using this money to go towards a house purchase - giving my kid a home, no longer being at the mercy of a landlord, etc
In exchange, help your child buy their own first home with gifting them the deposit to the value of what their investment would have been worth if you’d not have touched it!

@kiav

You can cash your child's bonds in and transfer to your own account. Then its your money again.

DH works in premium bonds and says if your child is under 16 you are able to withdraw as you wish :)

All the people saying it’s morally wrong — Jesus! Where do they think the money came from in the first place?? You were saving it for her. You’ve now decided you need it for something else. That’s fine! She’s 5 FGS! You hadn’t previously given her the money as an adult and are suddenly now asking for it back…

It is on her account with DD being a separate bond holder. Until the child is 16 the parent has full control to add and remove funds to their own linked account.
If it wasn’t intended that way they would not allow the parent access just like with junior ISAs.

Why do you have to tell the solicitor you are buying a new sofa

I guess 30k worth of the house will be your daughter's, probably as tenants in common? Can a 5 yo own property in the UK? 🤔

I'm just stuck on you thinking you're going to need 30k for a sofa and "a bit of work". Is it a magic sofa?

If you’ve got a dh/dp, I don’t understand why you didn’t put the £30k in their name, since you were presumably intending to use it for house purchase.