Advice on ISAs/ savings if SAHM

[Baloobear34]

Two questions really...

1. I’m considering having a career break and being a SAHM. Would my husbands income be considered ‘family’ money in terms of saving rules etc. So for example could we both save into ISAs? And/or savings accounts? Or would that be viewed as ‘his’ money being in two ISAs/ accounts? As technically he would have earned it. It’s currently paid into his sole account but would it be better/ make any difference if he changed it to being paid into our joint account? I’m afraid of getting us into trouble as I really don’t understand how one income works in terms of all of this! Also as a SAHM should I look to set up a pension? Anyone have advice/ experience of this?

1. My children’s grandparent has expressed an interest in opening savings accounts for them. I’ve read up and understand there is no tax on interest earned unless the grandparent passes away and the savings would then be subject to inheritance tax. This is of course a very generous offer from the grandparent but I want to know could the money be withdrawn if the grandparent needed it back e.g if in ill health and needed care. I don’t want their money locked away when they might actually need it (grandparent is not well off)

Sorry...definitely more than two questions!
Thank you x

You can put £20,000 p a into an ISA. Doesn't matter if the cash was earned by you, your DH, your parents or your best friend.

Definitely set up a pension. That's the biggest downside to being a SAHM in my opinion, missing out on those years contributions. Best to see a financial adviser about that. It's basically a long term savings account but with the benefit that contributions come from pre tax earnings. Not sure how it works re paying into someone else's pension though. Also worth making sure that you will have paid enough NI contributions to get your full state pensions.

ISA: doesn't matter who earned the money, just stick within the annual limit of £20k. If you ever move the money to another provider for a better interest rate, make sure you transfer it via the special process, don't just withdraw it and try to pay it in.

Pension: consider a stakeholder pension. They have low fees and a low minimum monthly contribution. You can pay in even if you don't work although I think there's an annual limit regarding the tax/Govt contribution.

YY to what a PP said about keeping up with NI contributions.

Children's accounts: the inheritance tax thing only applies if the 'giver' has given away over a certain amount each year, and that tapers off as the years go by, and it only applies to the 7 years before they die. So unless they're giving your kids thousands of pounds a year, it probably won't be a problem. Any tax would be due from their estate, not from the children's saving accounts. The money would no longer be owned by the GP so they have no right to get it back if they want/need it in future.

The only problem with children's accounts is that once they are old enough to withdraw the money, they can do so and spend it on whatever they like. So you won't have any control over them spending it on something worthy and not frittering it away.

Make sure you are claiming Child Benefit and the claim is in your name (not your husband's). This will give you National Insurance credits which will count towards your state pension.

Also pay into a personal pension.

Thank you, really helpful x

Yes, make sure Child Benefit is in your name (even if not entitled to money) and you’ll get state pension credit till youngest child is 12.
Pensionwise, I think as a non-earner you can set aside about £2880 a year and it’ll get topped up to £3600.
If you’re under 40, you can get a lifetime ISA - again a government top up will be given and you can use the money in retirement.

Saving for children- there’s a special ISA for that and the money can then be accessed by a child when they’re 18. No one can pay a penny out until then. If the grandparent think they might like to give DG some money but only if they don’t need it themselves in the future, then it might be better to gift if and when they’re happy to part with it.

I’d also say that long term savings/investments should really be in stock and shares ISAs. Interest rates on savings are poor and won’t keep up with inflation.