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??

Practically you can close the premium bonds and get the money. That, in itself, doesn't make it legal to spend the money on whatever you want. It's still the child's.

But they HAVEN’T given it to her! She’s FIVE. Can you imagine giving a five-year-old £30k?? Mine would probably have eaten it, drawn on it, thrown it down the loo, fed it to the dogs… They were saving it to give to their child later. Now they’re going to use it to buy a house instead. This seems very sensible to me and I honestly can’t believe some of the bonkers replies on here. Now if someone else had saved the money for the child, I’d agree they shouldn’t touch it — but it’s money they’ve put aside and as such I can’t see why they can’t change their minds about its use.

They absolutely will care.

Because it's saved in her name. She's 5, she can't currently make decisions about what it's spent on, so she would need to wait until she reaches majority to spend it. Choosing to buy her parents a house which she will not have any claim to ownership of is not something that we can assume would be her decision. Whether giving their 5 yo £30k was wise or not is irrelevant. They made that decision. The money is no longer theirs.

Again, what nonsense

OP you made the mistake when you opened a child account with premium bonds.

I have a premium bonds account in my own name which I use to save for potentially funding a first car/uni fees for my two sons. I purposely kept the money in my name and I pay into it every month. This way I can have control over the money. If you open a child’s account once they turn 18 they can do what they want with it. I have a cousin who this happened to and she literally frittered it all away and no one could stop her.

It's not nonsense, it's literally your job to care for your child.

If you can't afford to put money in their name, then don't.

You can't put money in their name, but actually still treat it as your money.

The problem is that the name on the account is not just cosmetics - there is a legal implication.

There is a limit of £50k per person on Premium Bonds. Just opening another account in someone else's name - even if it's your child's name - so you can exceed the limit is, therefore, fraud.

That's essentially the situation the OP is in - they opened the account with the best of intentions, but the end result is "I've put this money in, and I'm withdrawing it for myself".

The Lord giveth and the Lord taketh away...

If it's good enough for the big man, then who are we to argue?

The problem is the stamp duty, that is the only thing the solicitor needs to know from the £30k surely, can't you get that from elsewhere, is the stamp duty a lot.

I use the money I put in DDs account all the time. I've had a new roof and windows to save taking out expensive loans and I pay it back monthly. No big deal

Good luck with that one

Yes as her parent (and because she's under 16) you can easily cash them in and it will be paid into your account like the winnings. I don't see why it would be illegal or immoral. I am assuming when you buy your home, she will be living with you and not sitting outside looking sad.

The 30k is your dd money not yours.

If you knew you would be needing to use this money to buy a house why did you put it in her name? It sounds like it never really was your intention to let her keep the money , but a way to avoid paying tax…..

But no one there is checking whether you are laundering money and having to sign a legal document to that effect. Which is why it’s a problem when buying a house as the solicitor has to do this.

Yes, but you don't have to tell a solicitor where the money came from, this is the problem, if it's not absolutely right it won't be allowed.

@BetterWithPockets it's hers, but legally you are custodian of it until she is of age. That doesn't mean you can spend it on whatever you want.

It’s not her deposit. The lender won’t even know let alone care.

I’ve bought four houses and never had to ‘prove’ where funds came from for either deposit or stamp duty. Just said they’re savings and never heard anymore about it.

Just as a matter of interest - how much have her bonds won that you've avoided paying tax on ?

Solicitors should be checking 'source of funds'
This would not pass our on boarding process

You would have paid income tax first…. Then you can use that taxed income to buy bonds.

No tax on winnings.

How has tax been avoided?

There is zero tax paid on all gambling winnings. There is no limit to how much people can win without having to pay tax.

NS&I permit winnings to be paid directly into a parent's bank account and there is no tax liability.

Parents can sell the bonds and pay the money into their own accounts.

None of this is illegal or fraudulent. It is built into the NS&I website/systems.

The OP is simply taking back the money she's gifted, which she is legally entitled to do.

This is good advice.

OP - making no moral judgement and working on the assumption this is bad luck and you weren't attempting to evade taxes/be fraudulent, your best bet is to find another source of funds for the stamp duty. The reason is that whilst your solicitor may well not pick up on this issue, if they do it could lead to a complicated mess that you really don't need if you're trying to close on a house.

Your only issue is any money going through the solicitor's account - so the stamp duty, and their fees + search costs etc. Plus the deposit itself but sounds like that's fine because it's coming from the 50k and that's not a problem.

I appreciate that you might not have another source of funds, but if you do this is your easiest way to avoid issues.