AIBU -50k - NS&I

[JessicaRabbit23]

AIBU to put £50k each into a premium bonds account for my 3 kids whilst I wait for August to pay my mortgage off so I don’t get charged fees? Not sure if it’s morally wrong or not.

What are you getting charged fees on?

Your post is unclear.

Probably early redemption charges. They can be thousands.

Why would it be morally wrong?

Statistically you’ll probably get a lower return than putting it in a savings account with a fixed interest rate though.

Or you could be lucky and hit the jackpot (unlikely in just 5 months).

If I pay my mortgage off now I get charged £4050 ERC. Vs August it’s 50% of that

I don't get the moral aspect.

What's the moral question?

I’m confused

Do you mean because you’ve used your own premium bonds limit you think it’s wrong to invest money in your DC’s names?

You mean put it into the kids names then take it out and use it to pay your mortgage?

Because I feel like I’m giving them £50k and I will be taking it away for a bigger house. Obviously when I die everything will go to them but I feel abit sick about it. Don’t know why. Hopefully if I ever did hit jackpot I could keep the £50k in there for all of them.

I guess the moral question is that the kids are being used as tax free saving vehicles as OP has no intention of the money belonging to them. And I assume OP would keep any winnings.

If your intention is to withdraw the funds from all 3 accounts in August, what's the point. Why does paying £150k into PBs help your situation? You'd only have about 3 months before you have to withdrew the money.

I think it might potentially be fraud, on the basis you'd have to pay tax on the £150k until you use it to pay off your mortgage in August

Exactly this. I’m buying a bigger house for us all. I want a better life for us all. I want them to have their own bedrooms. But I feel I will be using them for potential gains also.

Why would she? That's nonsense.

Don’t do it then, put it in a savings account in your own name and get a few percent interest.
I did a little experiment last year and put the same amount in PB, savings and an S&S ISA and made 25% less on PB’s compared to savings and 75% less than my ISA.

It would be less than 5 months because you have to hold the money in PB accounts for a full calendar month before the funds go into the draw.

Because she's fraudulently claiming her kids ' tax free amounts.

You have to tell the bank where the money comes from when you pay off the balance and if it's in your kids' names they won't accept it.

Because interest would be earnt on it, if OP keep it an account in her name, and you pay tax on interest if it's more than £1k. The PB is not directly for the benefit of the children.

Why is she fraudulently claiming?

Honestly I wouldn’t risk it. There will be a paper trail that could come back to bite you. Divide it up and put it in high interest savings instead. As someone else has pointed out you have to wait a full month before the bonds are in the draw anyway so that’s a full month interest lost. Plus there’s a chance you might have lower than average luck with your PBs.

That makes no sense.

@limeandwatershe is transferring money to her kids to avoid paying tax on interest. Then taking the money back for herself. Therefore tax avoidance.

It still makes no sense.

She would still be better off by keeping the money in a bank.

Have you used your full ISA allowance this year? If not that's the best place for the first £20k, then you get a new isa allowance in April so can put another £20k in there. A cash isa will probably perform better the premium bonds and the interest will still be tax free. If you haven't used your PB limit put £50k in there too.

There are issues with putting the money in your kids names, I would just use a savings account and suck up the small amount of tax on any interest earmed over your allowance.