Child trust fund

[dude69]

Any ideas, would it be legal to pay money into a child trust fund account from a Ltd. company, gross (i.e. no CT payable)

CTF accounts are tax-free, but you have to pay up to 40% tax on the money getting it out, if you first pay it to yourself as a dividend.

Just a thought....

[TheFaQQer]

Any ideas, would it be legal to pay money into a child trust fund account from a Ltd. company, gross (i.e. no CT payable)

CTF accounts are tax-free, but you have to pay up to 40% tax on the money getting it out, if you first pay it to yourself as a dividend.

Just a thought....

It would be a BIK if you took it out - CTF should only accept payments from people rather than companies.

So, the company could do it, but you'd pay tax on it, so not worth it.

[moorfield]

However, if you have kids (sounds like you do if you were asking this question) at pre-school / nursery / childminder you can pay yourself childcare vouchers tax free ....

[FiveTimes]

Any ideas, would it be legal to pay money into a child trust fund account from a Ltd. company, gross (i.e. no CT payable)

CTF accounts are tax-free, but you have to pay up to 40% tax on the money getting it out, if you first pay it to yourself as a dividend.

Just a thought....

Annual limit of £1200/year per family member, not sure its worth it.

[TheFaQQer]

Annual limit of £1200/year per family member, not sure its worth it.

Just to clarify - that's per child that you can put in (in case people thought that any family member can put £1200 into the account).

[moorfield]

One problem with CTFs I think is that when your child hits 18 control of the money passes to them. Now what do you think an 18 year old is going to do with a large lump of cash ? - yes most likely p1ss it all away (and who can blame them). That's why I'm not using CTFs. I'd rather put money aside elsewhere (eg ISA) so I can give it to them when they need to do something constructive with it - like buy a house.

[TheFaQQer]

One problem with CTFs I think is that when your child hits 18 control of the money passes to them. Now what do you think an 18 year old is going to do with a large lump of cash ? - yes most likely p1ss it all away (and who can blame them). That's why I'm not using CTFs. I'd rather put money aside elsewhere (eg ISA) so I can give it to them when they need to do something constructive with it - like buy a house.

But then there will be tax to pay, depending on how much money you are giving. If it's over a certain threshold (£7k ish per year, I think), then they pay tax on it.

Of course, you could teach them some degree of fiscal responsibility and control, and then trust them to do what they will with the money.

[Fran]

One problem with CTFs I think is that when your child hits 18 control of the money passes to them. Now what do you think an 18 year old is going to do with a large lump of cash ? - yes most likely p1ss it all away (and who can blame them). That's why I'm not using CTFs. I'd rather put money aside elsewhere (eg ISA) so I can give it to them when they need to do something constructive with it - like buy a house.

But then there will be tax to pay, depending on how much money you are giving. If it's over a certain threshold (£7k ish per year, I think), then they pay tax on it.

Of course, you could teach them some degree of fiscal responsibility and control, and then trust them to do what they will with the money.

Me and my missus often have exactly this sort of "discussion". I think it's good to give them the responsibility, by that age they need to be sensible with money or God help them with all the credit around these days!

[ChimpMaster]

What's so good about a CTF anyway? You put your after-tax money into it and there's a limit of £1200. Interest rates on them are crap anyway.

The only bonus I see is that the scumvernment put in a whopping £250.

[moorfield]

I think it's good to give them the responsibility

Agreed - I guess how much you lump into a CTF depends how much you're prepared to risk "losing" through your childs spending.

If you invest £1200/year for 18 years then your child will have a pot worth £30k ish in todays money.

Interestingly, if you invest just £2808 (net of tax) into a stakeholder pension for your child in the first year of their life they will have a pot worth £185k ish in todays money when they reach 65.