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Investing for grandchild not resident in the UK

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forlesen
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Investing for grandchild not resident in the UK

#304493

Postby forlesen » April 30th, 2020, 1:33 pm

I'm not sure if this is the best board, but here goes:

My mother wishes to make regular investments on behalf of a new grandchild who is not resident in the UK. Note that the parents are not in government service of any form, so Junior ISAs are not an option. She wants these gifts to be potentially exempt transfers from an IHT perspective, so simply putting the money aside in an account in her own name, to be given to the child at some later date, is not ideal.

I've had a look round on her behalf, but I'm struggling to find a provider offering a suitable account. Junior ISAs are out, and child savings accounts all seem to have UK residency requirements. I thought I might be onto a winner with Hargreaves Lansdown's Junior Investment account, set up as a bare trust. However, reading their brochure, that also has a UK residency requirement for the child.

Any suggestions?

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Re: Investing for grandchild not resident in the UK

#304504

Postby dealtn » April 30th, 2020, 1:47 pm

forlesen wrote:
Any suggestions?


Any reason (other than ongoing costs) why the monies aren't "invested" in the country of the grandchild's residence? Is that a temporary home, or likely to be permanent? Does it not make sense for their pot to be in the currency and jurisdiction where they are most likely to be spending and/or inheriting it?

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Re: Investing for grandchild not resident in the UK

#304519

Postby scrumpyjack » April 30th, 2020, 2:27 pm

I have a grandchild resident in Denmark for whom I have set up a Bare Trust account at Hargreaves Lansdown. No Problem.

It can't be a tax sheltered account as the child does not qualify for an ISA or a JISA.

Any income or gains are taxed in Denmark so it is necessary to inform the Danish Tax Authorities.

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Re: Investing for grandchild not resident in the UK

#304523

Postby scrumpyjack » April 30th, 2020, 2:29 pm

Also bear in mind that some countries tax gifts on the recipient (as Denmark does). There are different rates depending on the relationship and a small tax free gift allowance.

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Re: Investing for grandchild not resident in the UK

#304526

Postby forlesen » April 30th, 2020, 2:39 pm

Thanks for the prompt replies.

dealtn: That is an option, but they currently are in a third world country, and could potentially relocate again. I suspect investment options will be relatively limited / insecure compared to the UK, and it would be a lot harder for my mother to deal with things directly.

scrumpyjack: Oh, that's very interesting and promising. HL have temporarily stopped accepting Junior Investment accounts due to staff shortages with COVID-19. But I'll take a fresh look once they reopen for business - the brochure I found is evidently not the full story. Thanks also for the heads up on local taxes. I'll need to look into that too.

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Re: Investing for grandchild not resident in the UK

#304530

Postby dealtn » April 30th, 2020, 2:50 pm

forlesen wrote:Thanks for the prompt replies.

dealtn: That is an option, but they currently are in a third world country, and could potentially relocate again. I suspect investment options will be relatively limited / insecure compared to the UK, and it would be a lot harder for my mother to deal with things directly.

scrumpyjack: Oh, that's very interesting and promising. HL have temporarily stopped accepting Junior Investment accounts due to staff shortages with COVID-19. But I'll take a fresh look once they reopen for business - the brochure I found is evidently not the full story. Thanks also for the heads up on local taxes. I'll need to look into that too.


Fair enough, that makes sense.

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Re: Investing for grandchild not resident in the UK

#304741

Postby yorkshirelad1 » May 1st, 2020, 11:02 am

forlesen wrote:I'm not sure if this is the best board, but here goes:

My mother wishes to make regular investments on behalf of a new grandchild who is not resident in the UK. Note that the parents are not in government service of any form, so Junior ISAs are not an option. She wants these gifts to be potentially exempt transfers from an IHT perspective, so simply putting the money aside in an account in her own name, to be given to the child at some later date, is not ideal.

I've had a look round on her behalf, but I'm struggling to find a provider offering a suitable account. Junior ISAs are out, and child savings accounts all seem to have UK residency requirements. I thought I might be onto a winner with Hargreaves Lansdown's Junior Investment account, set up as a bare trust. However, reading their brochure, that also has a UK residency requirement for the child.

Any suggestions?


Depends on the sums involved (as always, there should be a cost benefit element, i.e. does the sum involved/saved justify the effort of the work involved etc). How about Premium Bonds. Perhaps a simple trust in the UK with the grandchild as beneficiary at age 18. Bear in mind that something like an ISA (although it's noted here that the JISA isn't applicable here) which is UK tax efficient, is not considered tax efficient by the US tax authorities (so I believe BICBW that people who are UK US dual taxpayers have to declare their ISA contents to the US revenue as taxable). IANAL.

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Re: Investing for grandchild not resident in the UK

#304751

Postby forlesen » May 1st, 2020, 11:24 am

yorkshirelad1 wrote:How about Premium Bonds.


That's not a bad suggestion. This NS&I page https://www.nsandi.com/i-live-outside-u ... t-with-nsi suggests that it is possible for non-UK residents to hold premium bonds, which I didn't know. It notes: "If you live outside the UK, you should check whether local regulations permit you to hold Premium Bonds. For example, the US has strict gaming and lottery laws which mean that it may not be possible or practical to hold Premium Bonds while in the US." This aspect would need checking.

yorkshirelad1 wrote:Perhaps a simple trust in the UK with the grandchild as beneficiary at age 18.


Yes, setting up a bare trust was my first idea. However, which investment providers offer these for non-UK resident children? scrumpyjack suggests that HL do, but it's always good to have other options, particularly as HL are not accepting applications for new Junior Investment accounts at the moment.

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Re: Investing for grandchild not resident in the UK

#305300

Postby yorkshirelad1 » May 3rd, 2020, 12:16 pm

forlesen wrote:
yorkshirelad1 wrote:How about Premium Bonds.


That's not a bad suggestion. This NS&I page https://www.nsandi.com/i-live-outside-u ... t-with-nsi suggests that it is possible for non-UK residents to hold premium bonds, which I didn't know. It notes: "If you live outside the UK, you should check whether local regulations permit you to hold Premium Bonds. For example, the US has strict gaming and lottery laws which mean that it may not be possible or practical to hold Premium Bonds while in the US." This aspect would need checking.

yorkshirelad1 wrote:Perhaps a simple trust in the UK with the grandchild as beneficiary at age 18.


Yes, setting up a bare trust was my first idea. However, which investment providers offer these for non-UK resident children? scrumpyjack suggests that HL do, but it's always good to have other options, particularly as HL are not accepting applications for new Junior Investment accounts at the moment.


As always, you get what you pay for. HL have shaken up the market with their products over the last few year and offer good prices if they have something off the peg that you want. Trying to get something more bespoke would cost a bit more, and you'd probably have to go higher up the price ladder. Maybe talk to an IFA who knows their stuff. Or perhaps a short chat with a solicitor who can set up the bare trust for you (with appropriate advice cos it sounds like the circumstances you mention would require a bit of thought to get it right and cover possibile eventualities) and maybe work in conjunction with the IFA for the investments. As always, it'll depend on the sums involved and the particular circumstances of your set-up. Legal and IFA fees might be worth it to get it right and not end up with headache in the future. IANAL or an IFA.

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Re: Investing for grandchild not resident in the UK

#305327

Postby scrumpyjack » May 3rd, 2020, 1:00 pm

Also note that you can buy shares in your name in certificated form and then transfer those shares, still in certificated form, to YourName a/c child initials.

You then hold those shares as bare trustee for your grandchild and are not dependent on a broker or intermediary allowing such bare trusts

This is probably fine if you buy to hold until they are 18, say, an investment trust.

Re HL allowing a bare trust for a child, as I recall all they wanted was a copy of the birth certificate. The child already had a JISA before moving to Denmark and it was OK to carry that on as long as the child was in the European Economic Area. It wasn't taxable in Denmark as the child had no right to it until they reached 18.

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Re: Investing for grandchild not resident in the UK

#305330

Postby forlesen » May 3rd, 2020, 1:07 pm

Thanks again for all the helpful replies. Some plausible options, at least, even if a bit of work is needed on our part.

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Re: Investing for grandchild not resident in the UK

#347606

Postby TwmSionCati » October 14th, 2020, 11:17 am

On April 30th, forlesen wrote:
Hargreaves Lansdown’s Junior Investment account ... has a UK residency requirement for the child.
, to which scrumpyjack responded:
I have a grandchild resident in Denmark for whom I have set up a Bare Trust account at Hargreaves Lansdown.


But HL said on May 15th:
Anyone can open a Junior Investment Account on behalf of a child. The person giving the money, the person running the account and the child all need to be UK or EEA resident.
[http://www.hl.co.uk/investment-services/investing-for-children]

I too wish to make regular investments on behalf of a new grandson, but he’s resident in China where his parents work (and, of course, lying doggo until it’s safe to come to the UK).

DAK which investment providers offer bare trusts for children that aren’t EEA-resident?

TSC

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Re: Investing for grandchild not resident in the UK

#347623

Postby TwmSionCati » October 14th, 2020, 12:05 pm

Well, Googling
"bare trust" site:.co.uk
immediately reveals AJ Bell/Youinvest’s Bare trust Dealing account application form, dated June 10th [http://www.youinvest.co.uk/.../AJBYI_DA_baretrust_application_form.pdf]!

Silly me.

TSC

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Re: Investing for grandchild not resident in the UK

#347629

Postby forlesen » October 14th, 2020, 12:46 pm

Wow, surprised to find this thread coming back to life after so long!

Well done, TwmSionCati, you seem to have hit the nail on the head. Here is the Youinvest page leading to the form you linked:
http://www.youinvest.co.uk/investing-fo ... r-children

I've looked through the form, and I can't see any obstacles to the beneficiary being non-UK resident, or even a non-UK citizen - there is simply an extra section to fill in in these cases, and some possible complications around taxation.

There is a restricted list of countries (all European at a glance), but I'm pretty sure that is a restriction on the trustee, not on the beneficiary.

Many thanks

forlesen

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Re: Investing for grandchild not resident in the UK

#347714

Postby TwmSionCati » October 14th, 2020, 6:41 pm

Yes, I agree with everything you say.

Just to be on the safe side, I've emailed AJB: "Given that his residency, nationality and citizenship are all (so far) China, would the application be accepted?"

I guess if you do the same, that'll fix it for us!

TSC

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Re: Investing for grandchild not resident in the UK

#348361

Postby TwmSionCati » October 16th, 2020, 7:23 pm

Further to my last, on 16/10/2020 14:31, New Business Youinvest wrote:
Good afternoon
Thank you for your email.
I can confirm that we will be able to accept the Bare Trust based on the below details.
Please can you complete a bare trust dealing account application form and send to us either in the post or via email.
If you have any questions, please do not hesitate to contact me.
Yours sincerely Hasan Mahmood Customer Services Administrator


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