premium bonds

[pinkpats1976]

could someone give me some info on premium bonds. my father has inherited some money and wants me to have �20,000 to buy premium bonds. Is there any tax we would have to pay such as gift tax as the money would be coming to me in a lump sum or is it all tax free. he has already got the maximum amount himself in premium bonds can he buy them for me or do i have to have the money first to buy them myself. i have looked on the net but have yet to find any relevant info

[dzug]

There is no gift tax in the UK.

Assuming you are 16, then you have to purchase them yourself or at least sign for them. There will be a money laundering routine to go through - you'll probably need two forms of ID either when you buy them or when the purchase is confirmed.

If you are under 16 your father must buy them for you.

The only possible tax angle is that if your father dies within 7 years and his total estate including the �20K is over �275K then his estate (not you) will be liable to Inheritance Tax.

[Buenchico]

There is no such thing as Gift Tax in the UK so you've got no direct worries there. (If your father was to die within 7 years however, some or all of this amount could still be regarded as part of your father's estate when considering any liability for Inheritance Tax).

The upper limit on Premium Bonds defines a maximum holding by one person and not the maximum which that person is entitled to purchase. So there is no problem with your father purchasing Premium Bonds in your name.

Chris

[Buenchico]

It's amazing how often Dzug and I are typing in response to the same question at the same time!

Dzug is correct in saying that the application form will have to be completed by yourself but this doesn't prevent you from sending it off accompanied by your father's cheque.

Chris