MONEY Q&A; Gifts that grow up with the children

We want to give National Savings Children's Bonus Bonds to our two grandchildren. We find that one already has the maximum of the current issue, so we are looking for an alternative with the same sort of benefits and exemptions. Is there to be a new issue of Children's Bonus Bonds ?

KT, Gloucestershire

Children's Bonus Bonds last for five years. They can be bought for children under 16 and can be held after this age until the owner is 21. The current issue, J, pays a fixed 6 per cent tax-free if held for the full five- year period. The bonds have to be bought in units of pounds 25. The maximum holding is pounds 1,000, which applies to each issue.

Your grandchild with the maximum holding of Issue J will be able to hold more bonds when Issue K comes along. There have been 10 issues in the last seven years. The first nine issues had an average life of nine months. Issue J replaced the previous issue in March 1998.

Predicting the advent of Issue K is tricky. It depends on other interest rates and the Government's need to borrow money.

Alternatively, for children who have the maximum holding, consider a near-identical National Savings product, Capital Bonds Series L. This also pays a fixed 6 per cent for five years. The maximum holding is pounds 250,000.

There are two differences. Capital Bonds are sold in units of pounds 100 which may be too high for some parents and grandparents. Secondly, the interest is taxable, although it is paid without the tax being deducted. This makes no difference to the vast majority of children since their taxable income is well within their personal tax allowance (pounds 4,195 in the current tax year).

All taxable income arising from gifts as a parent is taxed as that parent's income if such income exceeds pounds 100. But income from investment gifts from other people, including grandparents, counts as the child's income.

Apart from National Savings there is the whole world of savings accounts and investments. Much of this is available to children. Be wary of accounts aimed exclusively at children. Brightly coloured money boxes and frippery can mask indifferent interest rates.

If you want some long-term fixed returns, consider gilts that mature when your grandchildren reach 18 or 21. They are easy to buy through National Savings and can pay gross (ie without tax deducted). The income could be paid into a separate deposit account.

A taxing anxiety

I am trying to complete my tax return before the 30 September deadline. I cannot work out my own tax bill. My parents gave me pounds 20,000 last December to help buy a flat. Where does this go on the tax return?

NW, London

First, that widely promoted 30 September deadline. In fact the deadline for getting your 1997-98 return to the tax office (and paying the tax) is 31 January 1999. If you are late getting the return back, even a day late, you'll be charged an automatic penalty of pounds 100.

The 30 September deadline is the date on which you have to submit a tax return if you want the Revenue to work out your tax bill for you. Miss it and the Revenue won't guarantee to work out your bill in time for the first payment on 31 January. But you can risk it and ask your tax office to work out the bill regardless of when you send back your return. If you don't get a bill, you can always make a payment based on a guesstimate of what you owe.

If you miss the 31 January payment, you will be charged interest, though you won't pay a penalty surcharge unless you still haven't paid by 28 February.

As for your gift of pounds 20,000, this does not have to be entered on your tax return. You won't have to pay tax on this gift except in certain circumstances. Inheritance tax may become due if the donor dies within seven years of making the gift.

At present, there is no tax on the first pounds 223,000 of taxable gifts of the donor's estate.

Holiday excess

Adopting a "belt and braces" safety approach, I took plenty of pesetas on a recent holiday to Spain. I ended up not spending it all and have pounds 300-worth left over. I may return to Spain next year and can't decide whether or not it is worth keeping the cash until then.

DM, Edinburgh

Will the strong pound have fallen in value by 1999? Will the advent of European monetary union strengthen the pound or the peseta? These questions are best left to the City's currency experts. What is certain is that whenever you change currencies, the money changers (banks, travel agents, etc) all profit at your expense.

Unless you need the pounds 300 now, holding on to the pesetas may be the best punt.

Write to the personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL and include a phone number, or fax 0171-293 2096, or e-mail i.berwick@independent.co.uk. Do not enclose SAEs or any documents you wish to be returned. We cannot give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given.

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?