To begin, let me state that Premium Bonds are a safe investment. They are government-backed and come from NS&I (previously National Savings & Investments). However, you should keep in mind that, after inflation is factored in, they will lose purchasing power from year to year.
There are a few things you should be aware of when it comes to Premium Bonds. To begin with, you can only purchase them for someone else if the receiver is under the age of 16; other family members must purchase them for themselves. They are available for purchase for any child, not only your own children or grandchildren. Premium Bonds for kids can be purchased online or by mail.
Adults can cash in their Premium Bonds whenever they wish, while bonds owned by children under the age of 16 can only be retrieved by the parent or guardian who has been designated.
Is it possible to buy Premium Bonds as a present for someone over the age of 16?
Premium Bonds can be purchased by anyone who is 16 years old or older. On behalf of their kid or grandchild under the age of 16, parents, legal guardians, and (great) grandparents can invest.
No interest is paid on Premium Bonds. Instead, your Bonds will be entered into a monthly prize draw to win tax-free gifts.
Premium Bonds – the prize draw
Every month, almost two million awards are distributed to lucky Bond holders whose numbers are determined at random.
For every £1 you invest, you will receive a unique Bond number. Every month, each number has a separate and equal chance of winning a prize.
On the National Savings and Investment (NS&I) website, you may learn more, apply online, and check if you’ve won if you have Premium Bonds.
Can Premium Bonds be given as gifts?
Premium Bonds are a terrific gift for any occasion, and they can also help you get into the habit of saving. A boost to their savings is a gift they can enjoy again and again, with the possibility to win cash prizes ranging from £25 to £1 million every month.
Is it possible to give Premium Bonds tax-free?
Premium Bonds are a tax-free investment, which means that the prizes are tax-free in the United Kingdom. Some people may desire to purchase Premium Bonds on someone else’s behalf. Is it possible to give Premium Bonds as a gift? Premium Bonds can be given to anyone, however there are some restrictions on who they can be given to.
What are the benefits of bonds as a gift?
A user can buy savings bonds for someone else and store them in their own account until they’re ready to present them to the receiver using the “Gift Box.” An e-mail will be sent to the gift recipient notifying them of the bond’s arrival. TreasuryDirect accounts are open to anyone who is 18 years old or older.
Is it possible for a parent to cash in a child’s Premium Bonds?
Buying NS&I Premium Bonds for a youngster is a fantastic idea because it’s a gift that keeps on giving (possibly).
Premium Bonds can be purchased on behalf of a kid by anybody over the age of 16, thus aunts, uncles, and even family acquaintances can participate.
Furthermore, NS&I’s decision in 2019 to reduce the minimum investment amount from £100 to £25 makes them a considerably more practical, or inexpensive, gift.
Instead, how about purchasing bonds for yourself? The following are the simplest methods for purchasing Premium Bonds.
How to buy Premium Bonds for your child
Parents and legal guardians can apply online, over the phone, or by mail to purchase Premium Bonds as a gift for their children.
Whether you’re buying for the first time or adding to your collection of Premium Bonds, you’ll need to be registered with NS&I.
As previously stated, you must invest at least £25 in Premium Bonds, with each £1 producing one unique bond number.
Every number has an equal chance of winning a prize, so buying more increases your chances of winning.
Until your child turns 16, you will receive confirmation of transactions, money for bonds cashed in, and rewards won.
Do you want to know whether you’ve won anything? The most recent results can be seen in this article.
Buying Premium Bonds for someone else’s child
If you want to spoil your grandchild, niece, nephew, or even a family friend’s child, you can apply online or by mail for an electronic or paper gift card to give to the child.
Your investment will be acknowledged, but only the chosen parent or guardian will be able to manage and cash in the bonds.
Before purchasing Premium Bonds for someone else’s child, there are a few things to consider.
Of course, you’ll want to make sure the parent or guardian is okay with you sending over their information and that they’re happy to look after the bonds.
These facts include the child’s and parent’s or guardian’s dates of birth and addresses, as well as the child’s Premium Bonds holder’s number (if they have one).
Everyone on the application will have their identity and address checked by NS&I, therefore there’s a risk that documentation will be required.
To avoid any unpleasant shocks, inform the parent or guardian that NS&I may contact them to request documentation to establish their identity.
Premium Bonds are detailed in detail, including how to purchase them, how to cash them in, when winners are revealed, and more.
How long does the process take?
If you’re buying the bonds as a present for someone special, you’ll need to prepare ahead and apply ahead of time.
NS&I hopes to open new accounts in seven to ten working days, but because everyone’s name and address on the application form must be validated, it will most likely take longer.
What happens if the child wins?
If the child outperforms the odds and wins a prize, the parent or guardian will have to decide what to do with it.
There’s no need to be concerned about tax implications. While a child cannot earn more than £100 in interest per year from savings, this does not apply to Premium Bonds winnings because they are rewards.
Finally, make sure the child’s information is up to date: there are millions of pounds in unclaimed awards held by bondholders under the age of 16.
Premium Bonds can be held jointly.
Some assets (such as a joint bank account) can be owned jointly with another individual, allowing the assets to flow to the survivor owner after the other owner dies. Outside of the estate, other assets can be designated to a beneficiary (such as life insurance). The assets in these cases can be administered without the need for a probate grant.
Premium bonds can’t be held in a joint account with someone else. Furthermore, premium bonds cannot be designated to pass to a beneficiary when the owner passes away. If the entire worth of NS&I items exceeds £5,000, you have no choice but to file for a grant of probate.
How do I get my child a premium bond account?
Premium Bonds might be a unique gift for a child under the age of 16. Regardless of who purchased the Bonds, the parent or guardian specified on the application is responsible for them until the kid turns 16.
Until the child turns 16, we’ll email confirmation of any transactions performed, prizes earned, and payment for cashed-in Bonds to the selected parent or guardian.
Parents or legal guardians can submit an application online, over the phone, or by mail. If your child currently owns Premium Bonds and you want to purchase more online or over the phone, you must first register. While we set up your registration, this could take a few days.
You have the option of applying online or by mail. You may request that we send you an electronic or paper gift card to give to the youngster. We’ll also give you a confirmation of your purchase. The Bonds can only be managed and cashed in by the nominated parent or guardian.
- Please double-check that the parent/guardian is willing to take after the child’s investment and that you have their permission to give us their information.
- We’ll verify everyone on your application’s identity and address, and we may need to request documentation to prove it.
- Please inform the parent or guardian that we may contact them to request proof of identity documentation.
Is it possible to purchase Premium Bonds as a power of attorney?
Trying to cover the cost of long-term care for a relative can be a difficult task. What are your alternatives?
Q. My Alzheimer’s-affected mother is currently residing in a nursing facility. I have power of attorney and recently had to sell the family house to keep up with her care-home expenses. This sold for a little more than £130,000.
Given the current low interest rates, would it be ethical for me to utilize some of this money to acquire premium bonds in her name, even if I would transfer the majority of it to a deposit account? Mum does not pay income tax because she is on a state pension.
A power of attorney’s job is to defend the interests of the person whose affairs they’re managing, which usually entails making financial decisions that don’t put the person’s money at risk. A senior court has provided guidelines on how a power of attorney should proceed: the judge advised powers of attorney to examine suitability and diversification (to spread any risk), to utilize products and accounts regulated by the FCA, and to seek proper financial advice.
As the individual gets older, the guideline suggests that powers of attorney move assets into cash investments. Most cash investments, such as bank and building society accounts and cash ISAs, are less risky than most equity-based investments. Because NS&I investments are government-backed, Premium Bonds and NSI Certificates (where available) are entirely suitable investments for a power of attorney to make.
So, certainly, you should invest in Premium Bonds on your mother’s behalf. They’re a safe bet with no penalty for early withdrawal, and who knows, she might even get the (tax-free) jackpot!
Carl Lamb, the Founder and Managing Director of Almary Green Investments Ltd, is dedicated to providing clients with excellent service.
Is it possible to give investments?
Stocks can be given as a present, with the recipient benefiting from any price increases in the stock. When you gift stock from an existing brokerage account, the shares are electronically transferred to the recipient’s brokerage account.
Is it okay if I offer my wife some money to invest?
It’s possible that you legitimately moved funds to your wife’s account to satisfy her financial needs, such as to assist her in starting a business. If the sum is to be repaid with interest, it is considered a loan. If you charge a reasonable interest rate and report this as a source of income, your wife’s earnings may not be combined with yours.
However, the money you gave your wife might be used to invest in stocks and create an income, saving you a lot of money in taxes by avoiding the clubbing of stock income (gains). Given the tight relationship between the parties and the tax advantages involved, it may be difficult to persuade the tax authorities of the lender-borrower arrangement. Typically, the provision is abused as a way to save money on taxes, which is something the IRS wants to avoid.