Premium Bond Prizes, Tax Free?
Posted: December 28th, 2020, 3:42 pm
Both my children have owned some premium bonds for several years. As they were under 16 at the time of purchase the occasional prize is deposited in my bank account and then I split and return the prizes to them at Christmas each year.
One is now over 16 and the other will be in the next few months. NS&I requires them to give their own bank account details when they reach 16.
They both agree that while they are dependents that they'd like to carry on sharing the prizes (FOMO on the share of £1M is clearly greater than giving up half of the occasional £25! )
What is the tax situation for this scenario? The winner can clearly give away half of their tax-free prize, but would the recipient get landed with a tax bill? Is there any way to mitigate this? This question is clearly aimed at the big prizes of £1M or £100k.
One is now over 16 and the other will be in the next few months. NS&I requires them to give their own bank account details when they reach 16.
They both agree that while they are dependents that they'd like to carry on sharing the prizes (FOMO on the share of £1M is clearly greater than giving up half of the occasional £25! )
What is the tax situation for this scenario? The winner can clearly give away half of their tax-free prize, but would the recipient get landed with a tax bill? Is there any way to mitigate this? This question is clearly aimed at the big prizes of £1M or £100k.