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.

Because the money does not belong to her children and her children are not receiving the benefit of it

You aren’t supposed to, but you can.

Maybe put any winnings from those accounts in a JISA for them. Or take them for a nice day out.

What tax? She could put it in a non interest bearing account until she needs it.

You can legally withdraw PB you have purchased for your children at anytime you wish.

There is no tax advantage to The OP whatsoever.

Yes, you're overcomplicating things. Just put get an instant access ISA - put £20k in now, another £20k in on the 6th April, and have £10k in a regular instant access savings account. I don't understand why you're bringing your children into it, and also premium bonds is a lottery.

Premium Bonds are tax-free because they don’t pay interest—instead you’re entered into a monthly prize draw, and any winnings are treated like lottery prizes, which aren’t taxed in the UK. The downside is there’s no guaranteed return.

I interpreted the post as putting £50k in for each of her 3 kids so I thought she had £150k which is obviously more than the isa allowance but maybe I misunderstood.

If you put it in their names it legally belongs to them this could cause issues when you take it out to pay for your house as the solicitors will ask where your money is from.

Again that's not true.

Have you looked how much interest you are paying on the mortgage each month? The early repayment charge and mortgage interest might cancel each other out. Sounds like you still have to pay a 2k early repayment charge if you wait until August. Might be worth paying it now and start saving on your mortgage payments.

@JessicaRabbit23this article might be a useful read https://www.thisismoney.co.uk/money/saving/article-14189213/Can-max-Premium-Bonds-two-children-boost-chances-winning.html

Fair point.
That said, personally I would still utilise a mix of cash ISA & regular interest bearing accounts. The interest can always be paid into a pension pot to ensure a net position of tax free is maintained.

Err might win something. Not going to gain much interest in that time. Nice problem to have though

It's definitely fraud, possibly also theft and money laundering, there is a chance it will be picked up and reported. Why wouldn't you just split it across various savings accounts until August?

It really isn't!

If you think tax dodging is immoral, then yes, it's immoral.

But it isn't tax dodging!

Why not? When you open a nominee for account and fund it, you're legally giving the funds to the child. If you then put them back in your own name you're stealing the funds.
I don't understand the rationale for doing this when it could be put in a savings account in the OP's name.
The only reason I can think of is to hide the true owner of the funds or evade tax on interest.

Evade tax on interest?

It would be a few pounds!

You'll make more putting it in a short term savings account, even though you need to pay tax on the interest.

What fees are you being subjected to?

It's not really above board so it will rule out any future career as a politician or MP, as if it comes out in the papers your career will be over. But in reality it's probably low down on the scale of tax evasion.
I guess there's also a small chance your children might claim the 50k plus interest back in future, on the basis that you were taking money you had technically given them back again. Maybe you can write a loan agreement on the back of an envelope to cover yourself! The cost of legal advice would be more than any saving.

Why else would op say her own savings are her children's?

I wouldn't do what op suggests. Not for any moral reason particularly, but because the hassle involved would outweigh the potential gain. NS&I can be quite clunky in their processes, and the thought of opening and then closing three holder accounts is not my idea of time well spent. I'd suck up any potential tax liability (may not be relevant depending on where the money is kept and what other savings op has) and make life easy for myself.

How do you gift money to your children, only to take it out again to spend on what you want? Unless I don't understand your intentions or the rules with premium bonds.

We are in exactly the same situation

£100k which will cover balance of mortgage. Mortgage finishes in August and is about 1.2% interest but big £4000 early redemption. No point in paying it off.

We put £20k in myself and my partners Isa for last year. Both accounts are paying about £70 per month interest.
We put £60k in a similar interest level savings account for me, but non ISA, until the new tax year starts and we will move £20k each into new ISA's.

If we are getting approx £70 per £20k thats about £350 per month interest. We put most of it in my accounts as i would pay less tax if we do get near any limits.

Its quite nice seeing the £70's add up. I think it will pay for a holiday for the 2 of us by the time we need to use it as its been in since mid last year.