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??

This. As if it is illegal ffs, who would even know!?

Think you may be able to reinvest the money in the house, but only if the portion it represents is put in trust. Ie a £300k house would mean 10% of it would be held in trust and become hers on her 18th birthday. You’d need a solicitor to set up the deed of trust and the mortgage company would need to be made aware - not sure what the implications are of this, but I can’t imagine it’s unusual?

My parents did this I had to sign it over when I was 18….
Yes I think it may be illegal as I remember feeling it was a tad unfair at the time. The man dealing with it didn’t know I was having to give it back. Maybe they set it up initially for me (first born) but realised they needed it. Tbf they worked in fairly low income jobs and needed to spend it on new exterior windows/doors etc.

I'm sorry but I don't believe that you told a solicitor that you were using 30k from your child's premium bond account and that account was set up because you had maxed out your own money, but it was actually always your money, and they then told you 'all ok run with it'. Well I do believe it because there are idiots everywhere but this does then make the solicitor an idiot.

If you asked a solicitor whether it was ok to use some money that was in a child's premium bonds account, I agree they probably would have said it is fine (or asked for more info). In reality I reckon few would think to ask and they'd probably consider just confirming it was NS&I was enough.

Why did you put into premium bonds? If you wanted to save for your daughter are more effective ways . With guaranteed returns rather than luck. Such as a junior ISA .

It seems to me that you wanted money in tax free account and used up your ISA and premium bonds allowancnes. So you did a tax scam, to avoid paying tax on interest/divs (outside of ISA or premium bonds) or the bond winnings themselves (given you kept them not reinvested for your daughter) , and put in your daughter’s name. I’m sure you’ll deny this

premium bonds are no different than any account . You open in your child’s name and gift them the money, then it is their money. If you intend to use it later for purposes you deem important, it is not a gift. It has gifting implication for IHT purposes as well,to be defined as a gift. Any bank account or investment you opened in her name would have same issues.

I'm not a fool. I understand tax avoidance.

Personally I've never had more than a modest income. But I opened up savings accounts in my DS's name from the moment he was born. I took great pride in saving regularly for him and great pleasure in handing the operation of his savings over to him as soon as he was capable of handling them himself.
I would never have dreamed of taking money that was in his name for my own use.
I understand OP just used her child's name as a tax dodge and it is apparently legal to do this but it doesn't sit well with me.

It's absolutely not legal to do this. But it's the type of low level illegal thing that lots of people do, and the vast majority get away with. It's not legal to speed either, and lots of people do that every day without a thought if they don't think they'll be caught.

I would suspect the NS&I has process in place to check for this sort of thing if there is a massive win though.

😂

I also agree the tax saving is minimal anyway and it doesn't really make sense someone would commit fraud to save basically nothing.

There is no tax involved here @stammergreetings

No tax is payable on the winnings from PB and they do not increase in value.

Either this was a genuine attempt to save money for the DD's future, or it was a way of investing and hoping to win something on the £30K.

It's not illegal to take the funds, but you should only be investing money in your child's name if you intend for it to be theirs. So learn the lesson from this, and don't put your own money into PB in her name. i invest £25 a month into PB for my daughter and that is her money, the same as if it went into a savings account in her name.

There is no tax payable on P Bonds.
They don't gain in value - ie interest.
They are only of value if you win something in the monthly draw and that is tax-free.

I have premium bonds for my kids, it's easy to transfer their balance back to the parent account. Perhaps the issue is because your account is already maxed. Withdraw £30k from your account then transfer hers across to you.

This is from the customer agreement that you would have read and agreed to:

"Any Bonds bought and any prizes paid in relation to them will belong to the child. The parent or guardian will have responsibility for managing the Bonds and any prizes paid for the child’s benefit. The child will then begin to manage their own Bonds when they reach the age of 18".

So you've agreed managed these bonds for the child's benefit. They won't tell you what to do with the money but you have agreed it will be for HER benefit. Only you can answer what that means.

You also will struggle when it comes to showing the mortgage company YOUR money if you plan to include DD's premium bonds

Stop worrying OP. You can take money out of a child's ISA until they are old enough to manage the account. Take the money out on the basis that this is providing a home for your child.

No you can't. You absolutely CANNOT take money out of a child's ISA unless they are given a terminal diagnosis

Exactly - like i said you can legally manage the account and in doing so can legally withdraw and spend as you like....

Now the morality is debatable......but that wasn't the question!

No tax is payable on the winnings from PB I mean it may not literally be the dictionary definition of a tax saving but it's pretty close.

they do not increase in value they do if OP decides to buy premium bonds with the winnings. It works the same way a savings account - the money doesn't increase in value if you withdraw the interest every time it's paid.

I don't know about the legality but morally this would be a big no from me.
You've already gifted it to your daughter, you are stealing from her, and It's not suddenly ok to do awful things to your children because they will never know.
And it's not even because you need it to survive, you can buy the house without it. You just want it for nice sofas and extras.

OP, you clearly don't like any of the answers. What you want to do is not illegal, but yes your daughter could pursue you for return of the funds later technically.

It's just morally questionable / people are unlikely to support your choice. It was just probably lacking in foresight on your part to save the money in her name when you couldn't afford to.

I was going to post the same.

Money laundering 🤣🤣.

The penalty for small time tax avoidance is that the revenue send you a bill. I really think that some people on here watch too much American telly.

Premium bonds can be withdrawn and used by the person responsible for the child. Legally there is no issue with that. Morally is different, and that is between you and your conscience if it was your childs money.

Accounts like JISA you cannot withdraw. The child can withdraw when they reach 18.

Legally

"The parent or guardian will have responsibility for managing the Bonds and any prizes paid for the child’s benefit"

That's it really it's up to OP to decide if this is genuinely for the child's benefit. Personally I'd not be getting my child involved in giving me money to buy a house.

given shes 5 do what you want and don't tell anyone

You said why would the mortgage company need to know where the funds came from

i I said they absolutely do need to know where it comes from. Not that she’s been gifted the money.

good lord