Time was when we quietly checked we had up-to-date addresses for Christmas. Now we check we have the right bank details. Faster online payments have made giving money to someone easy – and safe. Most – but not all – banks have introduced Confirmation of Payee, so if you get the account number wrong, or the name doesn’t match, the bank will warn you. Always be very careful, but fears of sending a festive 50 quid to the wrong person are by now largely outdated.
If you want to give money to a child born between 1 September 2002 and 3 January 2011, ask their parents if they have a Child Trust Fund (CTF) or a Junior ISA (JISA). All children born in these years were given a CTF and some will have been converted into JISAs. Money deposited in them is safe until they are 18, when they can take it out. Anyone can add to a CTF or JISA – up to £9,000 in total this year. If their parents don’t know, they can track it down through sharefound.org.
Money habits learnt in childhood last a lifetime, so it’s good for a child to have an account they can take money out of if they need to. It’s easiest for parents to open a savings account for the child, though grandparents may be able to do this, too. Children’s savings accounts pay interest rates that adults can only dream of, but even they are quite low.
More important is to establish how easy the account is to manage – one with a card is best as that’s how today’s children will manage their money (and their mobile, of course) and hopefully family members can help them understand how it all works. There won’t be any income tax to pay on the interest, unless the child is extremely wealthy.
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Inheritance tax rules let you give any number of gifts of £250 a year, and you can give bigger gifts, up to a total of £3,000 per year. Anything given more than seven years before you die is free of inheritance tax.
Paul Lewis presents Money Box on Radio 4
QUESTIONS? Send any questions to Paul.Lewis@radiotimes.com I cannot answer you personally, but I will reflect them in my column in Radio Times magazine.