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??

The same amount could be put entirely legally into an ISA (in OP's name) where the interest is tax free.

£20K pa is the ISA limit.

There's a lot of incorrect stuff being spouted here.

Yes but if the OP put the money in her child's name because she had hit the 50k limit in her own name, but never actually intended the money to be the child it is fraud (and therefore money laundering comes into play).

As I said, will the solicitor notice, will they care? It all depends on the solicitor. I don't think it's a bank issue because I don't think the bank cares where the stamp duty funds come from. The solicitor does but they may just see NS&I and not dig any further.

Does everyone do it? Doesn't really matter! 1000s and 1000s of people commit benefit fraud. If a solicitor found out that the funds you were using to buy a house were the result of benefit fraud, they would (if they were following the law) refuse to work with you and report you for money laundering.

OP it’s entirely up to you whether to use as you have explained. You wanted to save it for your DD but circumstances have changed and you now need it for something else that your daughter will also benefit from. I’m sure your will continue to save for her as time goes on. Don’t be guilt tripped by others on here. You know what’s best for you and your family

You're assuming this was done for a tax advantage. That's simply conjecture.

You would earn more money, on average, by putting the cash into a standard savings account and paying the tax.

I don't see how this is relevant. Absolutely she could have done but she didn't. This could be something the OP could use to evidence that she did intend the money for the child because otherwise why wouldn't it have been in an ISA (although can you get a 0 risk ISA for 30k? I thought it would have to be stocks and shares).

Nah at £30k and 50k she’ll be winning a lot. My grandad is always winning on them and usually quite good amounts!

It's relevant because someone said that she was avoiding tax on interest.
I pointed out there are other ways - all legal too- where savings are exempt from tax on the interest.

We have more than that and the winnings are not huge. They work out per year roughly the same as 4% on an ISA account.

Or into an ISA and NOT paying tax!

https://kennedyslaw.com/en/thought-leadership/article/2023/fiduciary-duties-owed-by-trustees-an-introduction/

If you want one specifically for a parent or a child, you search. This is an established point of law.

That said - there is no issue here. OP can spend the money towards housing for her child. It would be an issue if what she was buying was designer handbags for herself.

Yes but if the OP put the money in her child's name because she had hit the 50k limit in her own name, but never actually intended the money to be the child it is fraud (and therefore money laundering comes into play).

I think I'd be embarrassed for posting things like this that are simply fiction.

Fraud?
Money laundering?

Clearly you don't know what money laundering is- or fraud.

😂

Jeez the responses here are insane. Just cash the bonds in and buy the house. Just think more carefully next time about where you save your money, you clearly weren't intending to have gifted your 5 year old 30k, but the tax avoidance on this is a drop in the ocean (have you even won much on it?), I wouldn't lose sleep over it!

And if the OP had put the savings into an ISA in her own name, not only would it have had a better average ROI it would have avoided this entirely.

PBs are not a lottery and they're not gambling. You do not lose your stake.

Is, or is not, the maximum individual holding of Premium Bonds restricted?
Did, or did not, the OP circumvent this restriction by parking £30k in her daughters name?

We don't ultimately know why the money is in the child's name. I agree it could have been saved in other ways (although we don't know if OP has also maxed out her ISA limits), and I also agree the tax saving is minimal anyway and it doesn't really make sense someone would commit fraud to save basically nothing.

However, there are loads of people on this thread saying this is what everyone does when they max out their own 50k limit so clearly for some reason some people do it (and it is a good way to have a very low risk tax free savings pot). The fact that the OP didn't have any need to commit fraud (and probably didn't even think of it as fraud), doesn't mean she didn't commit fraud.

Is it something that she'll go to prison for for 20 years? Obviously not - but if Premium Bonds found out that they money was never actually her child's they'll ask for the winnings back. That said, how would they ever find out?

This.

If only that was the case. The MN Premium Bonds thread and my experience says otherwise. I’ve had several months of no wins at all, and the most I’ve ever won in a month was £125. Typically it is £25 or £50 on full holdings.

£30k would have median winnings of 3.75%.

Trading212 is currently paying 5.1% on an instant access account. A 20% taxpayer would get 4.08% after tax and a 40% taxpayer would get 3.06%.

The winnings aren't guaranteed, so half of people would get less than 3.75% and half would get more.

There is zero tax advantage for a 20% taxpayer to buy Premium Bonds. There might be a tax advantage for a 40% taxpayer, but it would be down to the luck of the draw.

Clearly the one's who are saying it's illegal/you are not allowed to do this etc....are the one's who do not have premium bond's for their children.....

People are seriously getting their knickers in a twist over this.

The question is about what is legally allowed!

I think OP now knows that as:
1.) she is legally allowed to withdraw premium bonds out of her child's account without question.
2.) she is legally allowed to do what she wants with that money once the money is withdrawn
3.) regardless if the money was used for a deposit on her house or not......and I have checked with my own solictor......she is legally allowed to use it a source of funds for her deposit.

She has not asked to be judged or questioned on her morality. In my opinion, I could give my 5 year old child £10 pocket money - I also have the right to take it back and not give it to them.

OP - stop talking about your financial situation to your friends - this will avoid them being jealous of your situation and saying the most absurd and uneducated things.

Well it's part of the fundamental logic of the law of property and parental responsibility. If you want to see the statutory basis then I would look at s3(3) Children Act https://www.legislation.gov.uk/ukpga/1989/41/section/3 and note the words 'benefit of the child'. I am not quite clear on why you think this wouldn't be the case. There is clearly a distinction between owning something and managing it. In the same way, a person with power of attorney cannot simply help themselves to the cash, even if they have extensive powers to manage it.

The issue here is that the money isn't 'really' the child's money but they have put it in her name to avoid tax.

Don't be telling 'friends' about your finances. Spend the moneyy on Your new home but perhaps don't put in your daughter's name in future if you want to utilise the money.

Did you put the money in DDs name or was it given to her, won by her or inherited by her? Because if it was then it is both morally and legally wrong to take it. If the money is from you, what were the reasons for putting it in her name?

My grandad must be really lucky 😂 I feel lucky when I win £25

She isn't using it as her house deposit (read!) so no need to worry a lender is there!

It's your daughter's money for her future. You would be stealing it buy a sofa even if she'll sit on it. You should also pay her prizes over to her.

It's not unusual to have to account for lump sums of money that've gone into your account when applying for a mortgage. The reason being that the mortgage company want to know that you don't owe someone else money.

In this instance you get the person who's given you the money (your 5 year old daughter!🤣) To write and sign a letter saying the money is a gift and does not require paying back. I think they might want a copy of the bank account the money came from too.

I don't think it's illegal.