Premium Bonds for new godson: gotchas?

[yorkshirelad1]

I have been asked for be a godfather (my nephew's son, so family connection), and his christening is next month.
I would like to give him Premium Bonds to mark the occasion, and have checked with his father, and read the info on the NS&I website and the mechanics of setting it up looks straightforward. The young man is going to be quite fortunate as I'm thinking of giving the whole £50k allowance (I'm remembering other comments on here about how the readership on TLF is probably not quite the representative sample e.g. https://lemonfool.co.uk/viewtopic.php?f=11&t=4337&start=1000#p505802).

I wanted to check if there were any pitfalls to giving a child a sizeable PB holding in terms of causing eligibility problems with any child benefits or tax credits and the like. Can anyone shed any light, or advise of any problems of eligibility for child benefits or support etc, or has anyone done this and found out it had unintended conosequences?

I did a bit of Googling but couldn't find much on this matter. TIA

[didds]

Others will surely know better than i but the immediate thought is that said child will have 50K of easi;ly redeemable assets.

Which would probably mean all the time he has them in his life he'd be ineligible for various means tested benefits? Its to all intents and purposes 50K cash.

didds

[MyNameIsUrl]

If you give the full amount, the winnings cannot be automatically reinvested. As there are likely to be prizes most months, have you given any thought as to where these should go? Managing these could be a nuisance for somebody over the next couple of decades if you don't set something up.

[scrumpyjack]

Others will surely know better than i but the immediate thought is that said child will have 50K of easi;ly redeemable assets.

Which would probably mean all the time he has them in his life he'd be ineligible for various means tested benefits? Its to all intents and purposes 50K cash.

didds

Don't worry, they are denominated in our rotten currency so they will steadily lose their real value over the years and not cause a problem with MTB

(though he might have problem with that if he wins the jackpot)

[Dod101]

Others will surely know better than i but the immediate thought is that said child will have 50K of easi;ly redeemable assets.

Which would probably mean all the time he has them in his life he'd be ineligible for various means tested benefits? Its to all intents and purposes 50K cash.

didds

But surely that is to be applauded?

Dod

[ouzo]

Just one nephew, just one nephew's son? Could be expensive if there's more!

[yorkshirelad1]

Just one nephew, just one nephew's son? Could be expensive if there's more!

I have several nephews/nieces and great nephews/nieces, but only one godson (who is a great-nephew). Life can't always be fair. There are (and have been) other gifts in other ways at various times, as opportunity and tax-efficiency permit.

[Maroochydore]

Others will surely know better than i but the immediate thought is that said child will have 50K of easi;ly redeemable assets.

Have to agree a bit here. What I did with new grandchild was a smaller amount of PB's and the rest into a managed Junior S+S ISA. He won't be able to touch it until he is 18. Hopefully it will out-strip inflation over that period.

The PB's will give him a bit of excitement checking each month.

[yorkshirelad1]

Others will surely know better than i but the immediate thought is that said child will have 50K of easi;ly redeemable assets.

Have to agree a bit here. What I did with new grandchild was a smaller amount of PB's and the rest into a managed Junior S+S ISA. He won't be able to touch it until he is 18. Hopefully it will out-strip inflation over that period.

The PB's will give him a bit of excitement checking each month.

Interesting thoughts. Thank you. I'm going for PBs as once they're set up, it's very low maintenance. JISAs take a bit more thought/work/admin, and godson's father (my nephew) is already doing a Lifetime ISA (for himself, earmarked as 'pension' as he already has a house and as he's self-employed and doesn't have much else in the way of pension provision) with my support, so that's probably enough admin work (when he's trying to keep a young family and a self-employed job going as well). Also, godson's PBs will have to be held by his father until he is 16. Yes, it's not 18 (as a JISA) but only 2 years difference. I had a very useful reply from CAB about my OP question, which I will post as a separate reply.

[yorkshirelad1]

Someone suggested I ring CAB and I got a very helpful person who subsequently sent lots of information

Savings and investments should not impact eligibility for Child Benefit, however eligibility for means-tested benefits (such as Universal Credit) does depend on how much capital (including premium bonds) you have (you can find further information about this here https://www.entitledto.co.uk/help/savings).

Under the 'Ownership of capital of a child or young person' section in the Government's 'Advice for Decision Making Chapter H1: Capital' (which you can access here, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1073425/admh1.pdf) it states that:

'H1077 Capital owned either legally or beneficially by a dependent child or qualifying young person is not to be included in the capital of the claimant (*1). However, the decision maker may still need to make enquiries about such capital if it appears to be owned by the claimant but is actually beneficially owned by a child or young person for whom they are responsible.

H1078 Children and young people may not be the legal owners of the capital of which they are the beneficial owners. This is because businesses, such as banks, will not enter into a contract with them. If they are the beneficial owners and not the legal owners their capital will be held on trust by another person.

H1079 Children and young people become the legal owners of their capital when the terms of the trust say they can have the capital. In England and Wales this may be when they are 18 years old and in Scotland when they are 16.

(*1) H1080 A child or young person cannot be the legal owner of
1. real or heritable property (see H1020 4.) or
2. shares.

Sometimes a mistake is made and a child or young person is shown as the legal owner.'

Therefore, if your nephew is claiming any means-tested benefits, his dependent child legally or beneficially owning premium bonds (capital) bought by you would not affect his eligibility or entitlement for them. It may still be a good idea though to check with premium bonds if the child will be the legal or beneficial owner and if they will be held on trust by another person (and who this person will be). If you do decide to buy your future God-child (i.e. your nephew's son) the premium bonds and your nephew is claiming any means-tested benefits, it would still be a good idea for your nephew to declare his son owns them even though it shouldn't affect his claim (as long as he himself is not the legal or beneficial owner).